Making positive change for the environment and your employees

Employers can review their reward strategy and align it with their environmental goals to make positive change to employee pay and benefits as well as the environment.

The pandemic has brought change to how we travel, work and interact. There is a stillness, a greater silence brought on by the need to avoid physical interaction where it is not necessary.

This silence though has given greater voice to the importance of the environment and, coupled with the need to look at reward and expenses differently, there is a real opportunity to enhance pay, reduce business costs and improve the environment.

Additionally, it is often difficult for employers to make a practical change that employees can clearly see all the benefits of, including their reward. Sometimes, it can feel like a document exercise to the employee rather than an area where dynamic change is being implemented that helps both the environment and them.

For many organisations, the pandemic has shown how people can work differently, be resilient and make positive change.

Some great environmental benefits have been a by-product of these changes, including:

  • Less travel undertaken, both normal commuting and business meetings, with video conferencing via Zoom & Teams being everyday (or every hour) occurrences;
  • Less printing and use of offices, meaning a reduction in energy and paper usage for businesses;
  • Changes in purchasing behaviours, with more local suppliers being accessed given the need for instant delivery and available produce.

With these changes come other challenges, however, including employees’ energy bills increasing, employee well being, communication issues due to a lack of physical interaction and certain employee reward programmes losing their “reward”.

What can be done?

Employers can review their reward strategy and align it with their environmental goals to make positive change to employee pay and benefits.

Examples may include:

  • Allowing employees to work more permanently at home;
  • Removing benefits like car parking and staff canteens and replacing them with tax/NIC free home working allowances and installing home EV energy points;
  • Incorporating electric bicycles into your travel and reward strategy;
  • Enhancing employee company car policy by proving electric & hybrid vehicles only - this will reduce carbon emissions and increase net take home pay given the lower benefit in kind rates;
  • Helping employees purchase solar energy panels, EV chargers and other sustainable home energy initiatives to help reduce energy bills as well as carbon emissions. This may be achieved via salary sacrifice or loan arrangements. This could create significant cost and environmental benefits highlighting clearly to employees that your organisation takes care of its employees and the environment.; and
  • Moving to paperless systems for communicating reward, pay and other benefits. Having online flexible benefit arrangements can support this.

What’s the benefit?

The savings can be significant. We helped one business review its company car fleet for 17 employees. By tweaking the car offered for an electric or hybrid model and moving away from a private fuel benefit, we calculated savings of approximately £250,000 over a 3-year period across the employees and employer.

Separately, for one senior employee in a family business, we assessed the cost of moving from a car allowance where a diesel car was used to an electric Tesla. Over a four year period, this has created shared savings of approximately £50,000 for the company and employee. This was implemented via salary sacrifice.

Going further, additional costs can be saved in the long term by helping employees install sustainable home energy. We are aware of one client who charged their electric vehicle for work at no cost for a three-month period due to using home solar energy.

There can be no doubt that businesses that consider sustainability as a core strategy will balance their moral and regulatory obligations to provide innovative solutions that create shared value for all stakeholders.

While Covid-19 has shaken much of human society, the threat posed by global warming has not gone away. Businesses have a moral and, in some cases, a legal obligation to play a part in the reduction of global greenhouse gas emissions and the good news is that by doing so, businesses will be benefiting from improved energy efficiency and therefore lower costs.

The Streamlined Energy and Carbon Reporting (SECR) regulations introduced in 2018 make it mandatory for large businesses to report on their energy use and carbon emissions as well as the measures taken to improve energy efficiency in the period of the report.

Consideration of these innovative employee reward solutions will not only help you to ensure compliance with regulation, but it will also contribute to building trust with your stakeholders, enhance your reputation and future proof your business.

Next steps

With greater accessibility to sustainable alternatives and costs reducing (e.g. more electric vehicles, more charging points) as well as the Government looking more at how a joined up Tax Strategy can influence environmental change, there is a great opportunity for employers to take stock and get ahead by taking positive action.

Designing your sustainability strategy should incorporate your reward strategy and vice versa - they can help each other and really enhance and get across the culture of your business.

The Mazars ESG Sustainability Health Check

Our unique online Environmental Social & Governance (ESG) health check specifically aims to help and support businesses start their ESG journey. It provides an entry point to ESG awareness and how addressing such issues will deliver value to your business. It will help you to understand the imperatives of ESG engagement and measurement which lead to value creation and behavioural change.

Find out more here

How we can help

To help you further, we can offer a range of support from reviewing and measuring your sustainable & environmental impacts to designing new reward strategies.

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