Environmentally sensitive employee benefits

Climate change is big news for all of us and building a green employee benefits package is easier than you might think. Here Richard Stewart looks at some key areas:

Benefit options - plan design and benefit options can be used to support an environmentally sensitive package. Some benefits can be directly linked and the obvious one is a carbon offset option for those wishing to calculate their own carbon footprint and make a direct contribution. Under government approved payroll giving schemes, these contributions are income tax exempt and employees can also allocate employer benefit funding.

Pensions continue to represent one of the largest parts of a benefits package and choosing a provider with strong socially and environmental credentials is therefore important. A few pension providers operate in-house teams of fund managers but most use third party services to screen and provide approved lists of investments (both ethically and environmentally).

Supplier environmental performance - the Environmental Agency reports that 96% of the first 100 FTSE companies reported environmental aspects in 2006. Ensuring that all benefit suppliers have provided a environmental report that meets agreed criteria will help build a cohesive offering. The current challenge is obtaining useful information to enable comparisons. We expect the style of disclosure to improve inconsistency over the coming years but your benefit suppliers should all be able to provide a response to your requests.

Communication materials - the internet has provided a highly efficient mechanism to distribute information and manage employee enrolment. Benefit information disclosure is covered by a range of disclosure requirements (employment regulations, Office of Fair Trading and Financial Services Authority). Again, much of this information can be managed electronically to save on printing and paper impacts. When material is provided in print, the use of environmentally sensitive materials is an obvious consideration. Also, modern digital printing now provides viable options for printing short runs and on-demand documents.

Finally, the is an emerging number of providers offering environmentally driven products and services ranging from car insurance to financial products. This is supported by tax incentives and examples include the cycle to work scheme and reduced tax on low CO2 emission company cars.

Summary

As you can see making changes to take account of the environment is both possible and also an excellent way of modernising your reward ethos. However we warn against organisations making token changes that do not form part of their wider practices. This will undoubtedly become a leading factor over the coming years and we would expect to see government support through tax incentives and other initiatives.