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Work for us, we are offering you a company car!
Sustainable corporate mobility has become an increasingly relevant topic in the face of climate change, urban congestion, and shifting workplace trends. In Belgium, and many European countries, company cars are offered as an attractive incentive to employees due to favorable tax policies. However, this system has significant negative externalities, including increased carbon emissions, traffic congestion, and social inequality. Liesbeth De Wilde’s PhD dissertation, Employees’ Perspectives on Sustainable Corporate Mobility Policies: The Company Car and Its Alternatives, explores how corporate mobility can transition towards more sustainable alternatives while considering the perspectives of employees and other stakeholders.
The widespread use of company cars contributes significantly to unsustainable travel behavior. In Belgium, congestion levels and air pollution are among the highest in Europe, with company cars playing a considerable role in this issue. Additionally, the tax benefits associated with company cars create economic inefficiencies and social inequalities, as these benefits are primarily available to high-income employees. Despite European Union reports highlighting the unsustainability of the current company car system, few provide clear recommendations on how to implement effective reforms. De Wilde’s research addresses this gap by analyzing policy measures that could provide alternatives to the traditional company car model and assessing employees’ acceptance of such measures.
Effective green mobility policies
De Wilde finds that there is no single policy that benefits all stakeholders equally. While a tax shift that removes company car subsidies appears to be the most sustainable solution from a societal perspective, it is politically challenging due to the significant economic impact on employees who currently benefit from company cars. Among employees, a mobility budget—where individuals receive a flexible allowance to spend on various transport modes—emerges as the most preferred alternative. However, the effectiveness of such a budget depends on individual preferences, accessibility of alternative transport, and financial viability.
Employee attitudes toward sustainable alternatives
A crucial focus of De Wilde’s study is understanding employees’ willingness to adopt alternative mobility solutions.The survey reveals that employees with company cars are less likely to consider sustainable transport options than those without. The financial aspect plays a crucial role in their decision-making, with most employees requiring a significant monthly compensation to give up their company car. On average, company car drivers indicated that they would need €683 per month in compensation to make this transition. Additionally, about 20% of respondents expressed interest in trading their company car for cash without purchasing a private vehicle, while 55% stated that they would not consider giving up their company car under any circumstances.
Financial incentives
Financial incentives prove to be a key factor in encouraging sustainable commuting behavior. However, De Wilde finds that measures, such as Belgium’s “Cash for Cars” policy and mobility budget schemes, have limitations due to their complexity and lack of significant financial benefits compared to traditional company cars. “Cash for Cars” is a measure introduced in 2018 to encourage employees to give up their company cars in exchange for a financial compensation. The goal was to reduce the number of company cars on the roads and promote more sustainable mobility choices. Employees who return their company car receive a monthly cash allowance from their employer. The amount of this allowance is calculated based on the catalog value of the returned company car and is subject to lower taxes than regular salary. Employees can use the cash freely, without restrictions on how they spend it. However, this measure was abandoned in 2021, due to low acceptance rate and administrative difficulties.
The study of De Wilde also highlights that environmentally conscious employees are more likely to accept alternative mobility solutions and require lower compensation for giving up their company cars. This suggests that targeting employees with strong environmental concerns could be an effective strategy for promoting sustainable corporate mobility.
Recommendations
- Promoting shared, electric, and automated mobility
Future policies should encourage the adoption of Mobility-as-a-Service (MaaS) models, where employees can access various transport modes through a single subscription. Electrification of company cars should also be prioritized, but policymakers must ensure that this shift does not lead to increased vehicle usage due to lower operating costs. Additionally, automation and shared vehicle fleets could further reduce the environmental footprint of corporate mobility.
- Implementing effective financial incentives
Since financial considerations play a significant role in employees’ commuting decisions, policies should focus on making sustainable options more financially attractive. This includes increasing the flexibility and benefits of mobility budgets, simplifying regulations, and ensuring that sustainable transport options are affordable and convenient. Tax reforms that gradually phase out company car benefits could also be introduced to mitigate economic disruptions.
- Engaging stakeholders in decision-making
A successful transition to sustainable corporate mobility requires the involvement of all stakeholders, including employees, employers, policymakers, and the transport industry. Employers should play a proactive role by offering flexible mobility options, while policymakers should create regulatory frameworks that facilitate this transition. Additionally, employees should be involved in discussions about new mobility policies to ensure that proposed solutions align with their needs and preferences.
De Wilde’s dissertation provides valuable insights into the challenges and opportunities associated with transitioning to sustainable corporate mobility. While financial incentives and alternative transport options can help reduce reliance on company cars, deeper systemic changes—such as tax reforms, infrastructure improvements, and behavioral shifts—are necessary for long-term success. The research underscores the importance of a holistic approach that balances economic, environmental, and social considerations while actively involving all stakeholders in the decision-making process.
