How to green a flexible benefits scheme

Whether through water use, air pollution, waste or greenhouse gas emissions, the carbon footprint we are all treading onto the planet is significant.

If you read nothing else, read this …

  • In October 2013, for the first time, UK quoted companies will have to report their greenhouse gas emissions in their annual accounts.
  • Sustainable and green benefits include bikes-for-work schemes, low-emission company cars, environmental pension investments and opportunities to eco-volunteer.
  • These perks, as part of a flexible benefits scheme, should also be aligned with the organisation’s corporate social responsibility (CSR) strategy.

But from 1 October 2013, the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 will require, for the first time, that all UK quoted companies report their greenhouse gas emissions in their annual accounts, plus what actions they plan to take to reduce their carbon footprint. The Department for Environment, Food and Rural Affairs has estimated this reporting could contribute to four million tonnes of carbon dioxide (CO2) emissions being saved by 2021.

Most organisations have a dedicated corporate social responsibility (CSR) policy, which includes how the business aims to improve its impact on the environment. But what does this mean for employees? Graham Simmonds, managing director and co-founder at Green Rewards, says: “Employers need to align this to a wider approach, such as committing to an environmental strategy, whether through commitments around carbon reductions or supporting the communities in which they operate.”

Alastair Denton, managing director of employee benefits at Edenred, adds: “Employers need to put together a holistic proposition rather than just tacking on things that look green for green’s sake.”

Employers can also reflect aspects of their CSR policy in a flexible benefits scheme, offering perks that fit a green or sustainable focus. In fact, this is an ideal place to include these benefits, because it offers employees a choice around how they support the environment. Richard Stewart, director of Mazars Employee Benefits, says: “There are environmental opportunities through these schemes, but typically it is left to the employees. It is more about the choice.”

Bikes-for-work schemes, for instance, might appeal to a small percentage of employees, but they cover both environmental and health issues. Stewart adds: “Employers offer choice because they have to allow people to do something that suits their circumstances. It might not be that everyone either wants to, or can, cycle to work. But for people who value it, they can do it, while others can do other things. That’s one of the fundamental aspects of flexible benefits schemes.”

Recognition programme

An environmental focus can also be included in a recognition programme. For example, employers can reward staff with a points-based currency from provider Green Rewards, which can then be reimbursed at an online green shop or donated to a local community or charity project.

Simmonds says: “It is up to the employer to decide the earning rate of green points. For instance, if an employer wanted to reward employees who cycle into work, we would help them to work out roughly how many employees do that, how many miles would be cycled per year and how many points to give out per mile, based on their available budget.”

Employers should also consider the environmental impact of company car schemes, particularly because tax savings are driven by emissions. Cars with higher CO2 emissions incur a higher percentage of tax. Stewart adds: “A lot of employers are introducing car schemes that are imposing limits or steering people towards low-emission cars.”

Socially responsible pension scheme investments, such as ethical or environmental funds, are also becoming popular with employers, but mainly as a voluntary fund. Stewart adds: “Socially responsible investing is more of an option that is offered to people rather than being the default.”

Carbon offsetting

Another way to offer employees choice around their environmental spotlight is to include a carbon-offsetting scheme in a flexible benefits package. Environmental charity Pure the Clean Planet Trust’s scheme allows staff to enter their gas and electricity usage, as well as their travel, into an online calculator.

Robert Rabinowitz, chief executive at Pure the Clean Planet Trust, says: “It will tell you what your footprint is and you can choose how much you want to offset. We then take the money and look for a project to support.”

Employees can also choose to share the cost of their carbon footprint with charities, often through a payroll-giving scheme. Stewart says: “Through payroll giving, employers can give employees access to an open range of charities or, in some cases, run with a charity that is involved entirely in the environmental space.”

Ultimately, if an employer chooses to include green or sustainable perks in a flexible benefits scheme, it should also ensure this is aligned with an overall CSR policy. Rabinowitz says: “If an employer can make its employees aware of what their carbon footprint is and how they can reduce it, that’s going to support the organisation’s efforts in reducing its own corporate footprint. If it is part of a broader CSR strategy, that’s how you would get the most traction.”


Viewpoint: Tim Roberts

The connection between HR and sustainability might appear intangible. Does ‘employer of choice’ equal sustainable HR?  The Chartered Institute of Personnel and Development stresses that embedding sustainability requires us to link vision and values to the environmental contribution required from every employee. Yes, HR’s critical contribution is embedding transformational change. However, some environmental constraints are now affecting reward directly, especially pensions. So we now need to factor these impacts into our programmes and take long-term accountability.

HR’s sustainability role is intricate. Firstly, sustainability begins at home, so organisations must ensure they manage employees sustainably. Employee wellbeing, health and safety, work-life balance, inclusion, talent management, fair total reward, employee development, positive and open dialogue, and employee involvement in-house and out, are all vital. We all know they interlink to deliver a high-performing, engaged, healthy and wealthy workforce. Job done?

Secondly, look at cost-effectiveness and governance. Leading green organisations recognise that sustainable business is good business. It’s all about efficiency and cost-effectiveness, not PR. Are employers sure their total rewards optimise cost-effectiveness and return on investment, with key components supplied by reputable partners? The trend is to look at the true cost (environmental and reputational), as well as the social contribution of individual business activities. We should adopt this approach, too. What does it say about our reward components and their relative cost or contribution?

Recently, we highlighted the impact of reduced investment returns and robust inflation on pensions. Secure, affordable pensions depend on a clear investment return gap. The challenges here arise from the long timeframes and strong correlations in carbon, climate, resource and investment management and pensions. This calls for a radical rethink of saving-at-work incentivisation with far more lenient taxation, not penalisation.

Thirdly, integrated programmes will lead to an improved understanding of global climate and resource scarcity challenges. Simple workplace actions often achieve the greatest change, such as Center Parcs rewarding employees’ home energy savings to reinforce how vital energy efficiency is corporately. Sustainable HR and rewards add up for the individual. Helping employees reduce their commuting, business travel, home energy and water costs today will add up tomorrow at individual and corporate level.

It is impossible to address all the crossovers between HR, reward and wider sustainability here. The issues are complex and we all live in a highly interconnected world with a weakened economic system but, as US president Barack Obama has said, we can no longer ignore them, not even in HR and reward.

Tim Roberts is managing director at Good Measures


Case study: Accenture UK and Ireland

Accenture UK and Ireland offers a range of green benefits to employees through its flexible benefits scheme. These include a bikes-for-work scheme, a recognition programme provided by Green Rewards, free home energy audits and a volunteering allowance for eco-volunteering activies.

Camilla Drejer, corporate citizenship lead for Accenture, UK and Ireland, says these benefits are tied to ensuring the sustainable growth of the business.

“Fostering environmentally sustainable growth for our organisation and our stakeholders is at the heart of our environmental strategy,” she says. “As a people-based business, all this is underpinned by how we engage our staff and support them in taking action to reduce their personal and business environmental footprint.”

The energy audit is part of a pilot project called Green My Home, under which 50 Accenture employees have signed up for free home energy assessments. Another way for staff to go sustainable is by claiming 12p per mile each time they cycle to business meetings. The Green Rewards programme enables staff to use recognition points to buy sustainable products and services.

Accenture employees are also allowed up to three days’ paid leave each year to volunteer in their local communities. Drejer says: “Eco-volunteering covers a range of activities, from conservation work and tree-planting through to sharing business skills with young people looking for careers in the green sector or helping our sustainability charities develop their organisational framework.”

The organisation also offers its staff free membership of its Environmental Action Group (EAG), which aims to increase sustainability awareness and support the implementation of more eco-smart work practices. 

“We connect with our members through a monthly call, an online Yammer group, and postcards and newsletters,” says Drejer. “The EAG consists of over 400 employees from across the UK and Ireland and links in with similar groups in other countries around the world to share ideas.”

Withers increases pensions take up

Case study: Withers

Law firm Withers has been working to raise its corporate social responsibility (CSR) profile alongside the green benefits it offers to staff.

When it launched its flexible benefits scheme in April 2013, it included a section called Ethics and Sustainability, which is the entry point into its payroll-giving, bikes-for-work and carbon-offsetting schemes.

The carbon-offsetting benefit, provided by Pure the Clean Planet Trust, allows staff to enter the details of their carbon footprint online and determine an amount they can pay to offset it. Sharon Tebb, compensation and benefits manager at Withers, says: “It makes you feel OK about flying and all the other things you do.”

Sustainability’s fit with CSR is part of the law firm’s culture. Tebb adds: “People ask quite often about our CSR policy when we interview. That’s why we are trying to offer more of these types of benefits.”

However, such benefits might not suit all employees, which is why they sit well in a flex scheme. “It doesn’t matter if you don’t get 50 people doing it,” says Tebb. “It’s all about that choice.”

Tebb’s other hat at Withers is as CSR manager and she has helped to shape the programme over the past year. “We didn’t really have any real programme,” she adds. “We did a lot, but there was no formalised programme. I’m always looking for ways in one hat to improve the other hat.”