Paths to Corporate Sustainability

As a part of the communities they’ve served from their very beginnings, smart corporations have traditionally embarked on charitable and environmental initiatives to demonstrate their positive impact on the world. Yet today, in a new era of transparency and environmental consciousness, and as sustainable business practices proliferate the news, a formal sustainability strategy is no longer an option; it’s an imperative.

But where do you start? How do corporations determine priorities, set goals, and measure results in a way that satisfies not only senior management, but also employees, customers, investors, and the market?

The three largest car rental companies — Avis Budget Group, Hertz Corp., and Enterprise Holdings — share guiding principles regarding their sustainability platforms, the path to a plan, and on-the-ground best practices that make both environmental and economic sense.

Enterprise: A Natural Outgrowth

Enterprise Holdings’ sustainability program has been guided by various initiatives throughout the company’s recent history, including the company’s milestone projects surrounding its 50th anniversary in 2007.

“Our formal approach is a natural outgrowth of our culture: one that prioritizes the long-term health and viability of our business and our communities,” says Laura Bryant, assistant vice president for corporate communications and sustainability for Enterprise Holdings. “We didn’t just wake up one morning and say, we need a sustainability program. It was a growing awareness coupled with the fact that we operate a fleet of more than a million vehicles in the U.S. alone, and with that comes greater responsibility.”

Bryant says Enterprise’s roots in the local market played a factor in the sustainability program’s development. “We have this tremendous and very unique network within cities, towns, and communities,” she says. “Our neighbors are our partners. And in building that connection we thought we needed to do more. We’ve evolved into a major player at the airport, as well, but that hometown grassroots connection helped guide the sustainability thought process.”

This strategy is documented in a sustainability report, a platform to understand, measure, and communicate a company’s economic, environmental, social, and governance performance. The sustainability report — a function of the organization’s values and its governance model — is designed to demonstrate the link between a company’s strategy and its commitment to a sustainable economy.

In developing its sustainability report, Enterprise used the Global Reporting Initiative (GRI), an internationally accepted framework for companies to follow when measuring and reporting on environmental and social performance.

The GRI guides corporations in content and methodology, and it also calls for a “materiality assessment process,” a survey that ranks sustainability initiatives given by the company’s stakeholders: investors, corporate accounts, general customers, suppliers, and employees.

“The GRI reporting process was developed to promote credibility and transparency with disclosure requirements that often go beyond what might be promoted on a corporate website or marketing brochures,” says Claire Carstensen, global sustainability manager for Enterprise Holdings. “Guided by the GRI process, Enterprise has been able to expand our sustainability efforts by engaging with stakeholders to more deeply understand their priorities when it comes to sustainable business management.”

Down the Chain

While stakeholder involvement is essential to today’s sustainability programs, it is also critically important from a corporate account perspective, says Brad Carr, vice president of sales for Enterprise Holdings. Demonstrating sustainability initiatives are now key qualifiers on Requests for Proposals (RFPs) that Enterprise fills out for new and existing business.

“While sustainability issues have been a core component of contractual discussions for quite a while, there has been a definite shift to greater accountability and transparency,” Carr notes. “As a result, we’re seeing more contract-related questions about top-line sustainability issues from corporate accounts with defined corporate goals.”

From Carstensen’s perspective, that means working to help organizations better understand the long-term impact of corporate travel related to environmental impact, efficiency, and duty of care. Going further, Carstensen says there is a movement to implement a formal code of conduct throughout the supply chain to help manage topics ranging from business impact on the environment, agreements on collective bargaining, antitrust issues, and, on a more global scale, employee protections regarding modern slavery and child labor.

“This process is becoming more formal,” she says. “We’re sharing practices with our global partners and franchises.”

Initiatives and Savings

From an environmental sustainability standpoint, what matters to a major car rental company? The basic business model — renting a lot of cars from many locations — informs much of the plan.

Enterprise prepares its sustainability report using a “materiality assessment” in accordance with the Global Reporting Initiative (GRI). The assessment is based on feedback from employees, suppliers, corporate accounts, and internal leaders, and integrated with a review and analysis of public comments, reports by automotive manufacturers, and the car rental industry as a whole. Photo courtesy of Enterprise Holdings.
Enterprise prepares its sustainability report using a “materiality assessment” in accordance with the Global Reporting Initiative (GRI). The assessment is based on feedback from employees, suppliers, corporate accounts, and internal leaders, and integrated with a review and analysis of public comments, reports by automotive manufacturers, and the car rental industry as a whole. Photo courtesy of Enterprise Holdings.

Enterprise started formally analyzing energy usage at its locations in 2009. Initiatives centered on reductions in electricity, heating, and water. Centralizing the process, setting goals, and measuring them on a monthly and annual basis resulted in $20 million in savings since 2010. “From a financial perspective, it’s been extremely successful,” Carstensen says. “We have reduced our same-store costs since 2010 because we’re operating more efficiently.”

Regarding infrastructure, Enterprise implemented sustainable construction protocols in new facilities. While not all buildings would achieve LEED certification, “We want our facilities to run as efficiently as possible,” Bryant says. “It’s definitely not all or nothing. There is always lots of potential to make improvements.”
The company re-refines 95% of its motor oil in its North American service centers, and it recycles virtually all — more than 1 million annually — of its used oil filters. The company surpassed 5 million gallons in re-refined oil last year, more than any non-government fleet, Bryant says.

Glass from windshield and window repair and waste tires are also recycled.

Enterprise Holdings’ unique structure also plays a factor in how these initiatives are implemented. The company’s regional subsidiaries are run as separate LLCs, enabling local decisions that are based on recommendations, not mandates, Bryant says. “Solar may make sense in one state but not in others,” she says, “while water conservation might be more important on the West Coast than the Midwest.”

According to Bryant, the flexibility Enterprise enjoys as a privately held company not only provides a competitive advantage, but also a benefit when it comes to long-term sustainability efforts. “We are able to take the long view and invest in what makes sense, not just what will turn a profit right away,” she says. “We do this because it’s the right thing to do. It may take years to show its benefit, but we know it will.”

Avis: Local Practices Go National

Avis Budget Group started on its present path to a sustainability plan after emerging from the Cendant separation as a stand-alone public company in 2007 and 2008.

In keeping with the trend of accountability along the supply chain, one of the first steps was to compile and study the environmental reports of dozens of its top commercial accounts, says John R. Barrows, vice president, communications for Avis Budget Group. “(We did this) to establish benchmarks and best practices and to ensure that our programs and reporting help support our suppliers’ initiatives,” he says.

The company then conducted detailed inspections of large, medium, and small rental locations across different brands to understand where best practices were already in place and where opportunities for improvement could be found.

In some instances, shining a light on processes at a local level revealed better ways that could be implemented companywide. “We found out that our solid waste (old tires) was being regularly collected by third parties, but we didn’t always know what happened from there, so this could be a good or bad practice,” Barrows says.

In one instance, Avis discovered that tires from one location were being transported to an electrical generating facility that uses tires as fuel. The company then surveyed all its locations to not only make sure that used tires were being picked up, but also to understand whether they could be used to generate energy, Barrows says. Either way, the point was to follow through to understand exactly where these third parties were transporting waste.

In another local best practice, it was discovered that certain locations were recycling old motor oil on premises and using it to heat maintenance garages. The company expanded the initiative in locations where the weather would justify it.

 “We have been steadily improving over time, taking a continuous-improvement approach, taking smart ideas from one location and making these standard practices,” Barrows says.

Dollars and Sense

Following the trend to third-party validation, Avis Budget Group looked to the established criteria in external certification programs to guide its efforts. “This is how we came across the Environmental Protection Agency’s SmartWay Certification program, which might be one of our most important tactics,” Barrows says.

The SmartWay program aims to reduce greenhouse gas emissions and air pollution created by freight transportation in corporate supply chains. Certified vehicles must surpass an emissions output threshold, but they don’t need to have alt-power engines.

“In today’s economy consumers want to be green, but not if it costs more, and electric vehicles, plug-in hybrids, and the like continue to carry a premium MSRP,” Barrows says. “This means a higher daily rental rate compared with standard engine options of similar size and specifications.”

Avis accounted for the SmartWay program when fleeting. “Having almost 100% of several of our most popular car classes populated with (SmartWay) vehicles means our customers can get a ‘green’ car at any Avis, Budget, or Zipcar location,” he says.

Regarding financial impacts, “We often find that where our operations interact with natural resources, recycling, reducing, and reusing not only advance our environmental objectives but also help reduce operating costs,” Barrows says.

“We make tough choices when necessary, but often we don’t have to,” he says, citing the initiative to remove printed promotional material from rental cars. “When we looked at our customers’ perceived benefit from printed materials, the cost and environmental impact associated were high relative to the benefit, so it was fairly easy to take the actions we did.”

Initiatives that don’t impact the customer experience, such as recycling, are easier to implement and make economic sense, as well. “We sometimes find that where we can be greener, we can also be more efficient generally, which is one of our key global strategic pillars,” Barrows says.

Hertz’s Collaborative Effort

The Hertz Corp. has had various environmental and social responsibility initiatives in place for years, and in 2012 it produced its first sustainability report.

While Hertz found insufficient demand to rent electric vehicles, the company offers EV charging to employees at its corporate headquarters. Photo courtesy of The Hertz Corp.
While Hertz found insufficient demand to rent electric vehicles, the company offers EV charging to employees at its corporate headquarters. Photo courtesy of The Hertz Corp.

“We recognized the importance of highlighting our various environmental and corporate social responsibility initiatives on a broader scale,” says Angela Adams-Spence, corporate responsibility manager. “Since then, we’ve continued to expand our reach and sustainability efforts.”

Hertz’s sustainability leadership team serves as a hub for subject-matter experts, decision-making, and communication to the company’s 30,000 employees worldwide.

Along with Carstensen from Enterprise, Adams-Spence sits on the sustainability committee at the Global Business Travel Association (GBTA) to help craft RFPs that “support travel buyers and their sustainability journeys,” she says. “It is becoming more and more important for businesses to ask their vendors how they are going to impact their supply chain in a positive way.”

The sustainability team collaborates with the Hertz procurement department on a questionnaire that goes to vendors. “It’s a broad-based questionnaire in which we ask social and sustainability questions, and product-specific ones,” she says. “We want to work with responsible vendors that help us to be more sustainable.”

In 2014 and 2015, Hertz went through a very public overhaul of its management team, the largest in the history of the company. Adams-Spence was tasked with presenting the company’s sustainability plan to the new management.

Not only did the new leadership team keep the plan in place, she says, some took best practices from their previous employers and challenged her team to go further. “Through the change, we’ve gotten some pretty passionate leaders on this, which has been positive for us,” she says.

The payoff came in a rise in the Newsweek Green Rankings, an assessment of corporate environmental performance, in which Hertz moved from 329th place in 2014 to 54th in 2015.

Emissions Reductions

Though Hertz promotes its fuel-efficient rental fleet, from a corporate perspective, Hertz emphasizes emissions reductions from its physical infrastructure and employee travel impact.

The company works with CDP, formerly known as the Carbon Disclosure Project, a framework for corporations to report greenhouse gas emissions. Hertz reports — and is graded on — emissions for its corporate properties and employee travel, including company cars, employee car rental, and shuttle transportation. Hertz reports emissions of corporate rental customers that request it on their behalf.

LEED certification is the goal for new corporate (non-car rental) buildings, with eight projects underway in the U.S. Hertz’s new headquarters in Estero, Fla., recently received LEED Gold Certification, while its former headquarters in Park Ridge, N.J., was LEED Gold for existing buildings.

Cost-Benefit Analysis

In terms of the financial cost-benefit, some programs offer almost immediate savings; others are more long term. For some, a financial return is not part of the equation — but has ancillary payoffs.

“As a public company, we have a level of responsibility to our shareholders,” Adams-Spence says. “We look at environmental and fiscal responsibility in the same equation. We’ve been able to create a relationship with the finance and treasury departments, and they understand this isn’t just about the ROI; we have a bigger purpose here.”

Some programs end up not making business sense, such as the company’s carsharing division, which ceased operations in the U.S. in 2015.

Likewise, Hertz tested a pilot electric vehicle rental program yet pulled back. “The demand was not there,” Adams-Spence says. “In car rental, we don’t see the willingness to pay the increase in price to rent the hybrids and electrics, and the (charging) infrastructure is not there.”

Hertz’s Work at Home program is a win-win: Along with greater employee flexibility, it allows the company to consolidate office space while diminishing carbon emissions from reduced commuting.

Hertz made a substantial investment in recycling at its locations where the company controls the trash service. “We don’t see an ROI there, but think it’s the right thing to do,” she says. “Our employees asked for it.”

Per company policy, Hertz recycles its used motor oil and filters; a vendor that doesn’t recycle is not an option.

The company recycles spent tires, though it was approached by a vendor with a lower price that couldn’t guarantee recycling. The company decided to stick with recycling. “If we decide to change our mind, what is that impact?” Adams-Spence says. “It’s not worth going back on a publicly stated commitment for us.”

Solar power falls into the long-term return category, requiring a large initial capital outlay that must be weighed with factors such as sunlight exposures, local utility costs, and state and federal tax incentives.

Hertz installed solar panels on 16 rental locations and corporate facilities, with more on the way. About 15% of the energy to power Hertz’s corporate headquarters comes from solar panels that cover the roof of the new facility’s parking garage.

“We did the due diligence,” Adams-Spence says. “Yes, it’s a seven- to 10-year ROI, but to us it’s worth it, from being responsible to the precedent we’re setting.”

“From a recruiting and retention standpoint, we realize our new employee population wants to work for a responsible company,” she says. “It’s a big part of our onboarding process to help them understand from day one that we’re committed to this, that we have these great programs and we want their support.”

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