The CSRD Directive: Deciphering Its Impact on Corporate Fleets

How do sustainability requirements reshape fleet management? The influence is more profound than one might initially perceive. Our team at goUrban has delved deeply into the regulatory framework affecting companies across Europe, exploring the consequential shifts in corporate fleet management.

Sustainability has surged to the forefront of business considerations. CO2 emissions, a pivotal (non-financial) benchmark within companies, mark just the beginning of the sustainability spectrum. Broadly speaking, the sustainability agenda encapsulates the ESG (Environmental, Social, and Governance) criteria.

In this context, the European Union’s Corporate Sustainability Reporting Directive (CSRD) emerges as a cornerstone, guiding companies in sustainable reporting practices. The directive will expand its reach significantly, affecting approximately 50,000 enterprises, a stark increase from the ~12,000 firms currently engaged under the Non-Financial Reporting Directive (NFRD) that has been in force since 2017.

The criteria for CSRD applicability are straightforward, requiring companies to meet two out of three specific benchmarks:

• From January 2024, companies must have over 500 employees, a balance sheet exceeding 20 million euros, and net revenues above 40 million euros.
• Starting January 2025, the threshold lowers to companies with over 250 employees, maintaining the same financial criteria.
• By January 2026, even smaller companies with more than ten employees and lesser financial thresholds (€700k euros in revenue and balance sheet of €350k will need to comply — provided they have listed instruments on regulated markets in the EU (subject to certain exemptions).

It becomes clear that businesses must proactively engage with ESG and CSRD mandates. Although deadlines provide some leeway, and larger entities already complying with NFRD might possess a head start with implemented measures, the urgency remains, especially for those previously outside the NFRD’s scope.

The introduction of CSRD regulations poses several new challenges for businesses, including:

• Dual materiality demands reporting on both financially and socially, or environmentally significant issues.
• Reports must be formatted for machine readability.
• External audits are compulsory, adding not just cost but also necessitating sophisticated tracking systems to enable external auditors to verify data confidently.

Impacts on the Entire Mobility Strategy

The ripple effects of these regulations on fleet management and broader corporate mobility strategies are immediate. The CSRD guidelines heighten stakeholder and customer expectations regarding sustainability. Consequently, companies are compelled to establish solid sustainability goals and transparently demonstrate their achievements.

A proactive approach to sustainable mobility strategy, aligned closely with travel management, becomes indispensable. Companies must not only envision but also enact concrete CO2 reduction targets. Electrifying the entire fleet presents a radical but increasingly considered option to slash corporate carbon footprints. However, such a transition raises several queries:

• Is a full transition to electric vehicles feasible across the fleet?
• If not, what are the viable alternative propulsion systems for vehicles unsuitable for electric conversion?
• What are the available charging solutions for vehicles at company sites, employee residences, and public areas?
• Is it worthwhile to make company vehicles “shareable” amongst many employees in order to reduce overall fleet size?

Four Dimensions of Corporate Mobility

Corporate sustainability efforts must encompass all facets of mobility:

• Employee mobility: commuting practices
• Business mobility: travel during business hours
• Visitor mobility: access to company premises
• Factory mobility: intra or inter-site transportation

Each mobility type offers opportunities for greener transportation options such as walking, biking, public transit, trains, e-scooters, and electric vehicles. Moreover, the pandemic-induced shift towards virtual communication offers a substantial means of reducing travel footprints.

Economic and Organizational CSRD Challenges

The expanding complexity of sustainability and CSR requirements poses considerable challenges. Financially, transitioning to electric vehicles entails significant initial costs and the need for charging infrastructure. Organizationally, integrating sustainability requires fundamental changes in corporate culture and processes.

Sustainability: Opportunities Across Business Domains

Nonetheless, these challenges also usher in opportunities. Aligning with ESG criteria can enhance a company’s market distinction, appealing to both prospective employees and clients. The traditional allure of company cars may give way to more flexible mobility budgets or shareable company fleets that can be booked privately as well — as a perk in order to strengthen employee retention / satisfaction and push the employer brand to in the competitive market for new talent — reflecting a societal shift towards environmental consciousness. This transition affects various corporate functions — from fleet and facilities management to human resources and executive leadership.

Ultimately, embracing ESG guidelines necessitates a profound evolution in the role of fleet managers, paving the way for the emergence of ‘mobility managers’ — a role with a broader and more strategic focus, underscoring the profound transformations within corporate mobility paradigms.