Earth Day, recognized on April 22, is an annual global event that promotes environmental protection and increases awareness about the critical need for sustainability.

As we face the challenges of climate change, individuals, communities, and various industries must come together and work towards a better future.

The transportation industry is stepping up by implementing measures to reduce its environmental footprint. Organizations with corporate transportation fleets are seeking asset management partners to help them focus on achieving their ESG (Environmental, Social, and Governance) goals.

In this blog, President & CEO Brian Holland of Fleet Advantage tackles a few of the top trending questions organizations are facing regarding achieving ESG goals within the transportation industry.  

1. Why is it important for organizations with corporate transportation fleets to create ESG initiatives?  Companies are increasingly paying attention to their ESG goals and sustainability efforts and are realizing that reducing their carbon footprint is not only good for the environment but also good for their bottom line. These initiatives are important to curb carbon emissions output by shortening asset life cycles and optimizing vehicle specifications to be more fuel-efficient and to align with the duty cycle as well as geographical locale. This is especially timely as the Environmental Protection Agency (EPA) proposed a more substantial set of greenhouse gas standards for heavy-duty vehicles for model years 2027 through 2032, building from the “Phase 2” greenhouse gas standards established in 2016.
   
   
2. How is the transportation industry positioned to lead the way in attaining ESG goals?  And how can asset management companies assist them in reaching those goals?
   For example, a company may want to lease their electric heavy-duty trucks and perhaps from there go into financing the necessary EV charging infrastructure. An important consideration for the asset management firm is to help calculate the risks and opportunities associated with the pace of technology evolution. Much of the technology required to address environmental challenges is in its infancy.
   
   Consider the fact that the battery that powers an EV is only one component of the vehicle. Product evolution is moving quickly, often with early-stage companies that may have yet to reach a viable commercial scale. Successful finance and asset management strategies associated with these companies must begin with a keen understanding of all the elements of a complete solution and all risks involved. This requires a data analytics-driven, customized approach to creating vendor relationships and critical analysis models.
   
   This is why the equipment finance and asset management industries play a critical role – these firms have the data and resources necessary to help transportation companies make intelligent decisions that see the entire landscape of requirements to make the right decisions that satisfy their ESG goals. Forward-thinking fleets utilizing flexible leasing solutions and advanced data analytics to emphasize shorter life cycles will be well-positioned to take advantage of newer, clean diesel technologies or ALT fuel trucks as they become available. Today, many fleets use this principle of innovation as a foundation to encourage philosophical change within the transportation industry. 
   
   
3. What are a few steps those organizations can take towards creating and implementing ESG initiatives? Where can they begin? 
   The combination of data analytics and flexible lease finance options is proving to be a key strategy in helping fleets be sustainable in terms of determining the proper adoption method for newer, alternative fuel vehicles. By leveraging the power of data analytics for new applications that revolve around alternate fuel technology, they can further identify and optimize their Total Cost of Ownership (TCO) to determine the efficacy of utilizing electric and other types of ALT fuel vehicles. 
   
   
4. How can the transportation industry help address the goals of reducing emissions and combat the real, everyday consequences of greenhouse gas emissions and a global reliance of fossil fuels? Clearly, the effects of a heightened ESG focus are being felt throughout the global economy. This includes the transportation industry, as funding sources, employees, clients and business partners continue to plan for an ESG future with greater goals of reducing greenhouse gas emissions and global reliance on fossil fuels. While these trends are imminent, a number of industry players are getting ahead of the curve in adopting strategies to reduce their carbon footprint, position themselves in the ongoing need for qualified talent, and finance the equipment necessary to achieve a net-zero carbon future.
   
   
5. In your opinion, to combat the effects of climate change and reduce global emissions, will organizations need to become more selective about their finance partners and overall truck procurement strategies?
   Adopting ESG strategies will require fleets and their finance partners to examine internal and external options that better align with requirements for increased ESG transparency and market demands. These could include enhanced availability of financing options for different asset classes or utilization models. As ESG reporting and regulatory requirements evolve and become more standardized, organizations will see the benefit of adapting their internal strategies and processes to prepare for change and leverage ESG to create value.