If your company is concerned about the environment and your impact, you’re in good company. Almost two-thirds of business leaders said in a recent survey that climate change would have a high or very high impact on their business strategy. In fact, most business leaders have already invested in a greener future.

So how is your company going to tackle the challenge of building a more environmentally friendly business? One impactful way companies can move toward greener operations is to offer benefits that encourage environmentally friendly practices. Offering a commuter benefit that encourages employees to commute using mass transit and carpooling instead of driving their own car can be a meaningful strategy to help combat climate change. In this post, we’ll discuss why.

Environmental impact of car-based commutes

The transportation sector is responsible for emitting 28% of the total greenhouse gas (GHG) emissions for the United States, which makes it the largest single contributor to our country’s emissions. Commuting in personal cars is a big part of that statistic. Here are others:

• 76% of American commuters do so in their personal car.

• People in the U.S. travel an average of 42 miles a day in their cars. 

• A car using 1 gallon of gas will emit 8,887 grams of CO2 into the air.

• The average annual CO2 emissions from a personal vehicle is 4.6 metric tons. This number will vary depending on the type of fuel used, the fuel economy of the car and the number of miles driven per year. 

If, as an employer, you can help reduce the amount of GHG emissions sent into the atmosphere every year by encouraging environmentally friendly commuting practices, you could go a long way toward creating a more environmentally friendly office. 

Environmentally friendly forms of commuting

Since commuting to and from work in a personal car isn’t environmentally friendly, what are the greener forms of commuting that should be encouraged through benefits?

• Walking. Walking to work has the lowest impact on the environment as it doesn’t create emissions, it doesn’t require the manufacture of equipment that have their own impact on GHG, and it doesn’t add to noise pollution. You could encourage walking by instituting a “steps” challenge where participants can earn contributions to a Lifestyle Spending Account (LSA) if they reach a certain activity level. You could also encourage walking by opening new office or coworking locations near public transportation hubs.

• Biking. Biking to work is the next best thing to walking. A non-electric bike is the most environmentally friendly form of a bike commute as it doesn’t require an additional energy source other than the employees’ legs. But if using an electric bike makes biking to work more attainable for employees that live farther away from the office, this an environmentally friendly option as well. You can encourage biking to work by offering a post-tax commuter benefit that allows for employees to reimburse for bike repair costs or municipal bike shares. You could also ensure that there’s safe, secure, and convenient bike parking near your office. 

• Mass Transit. Different types of mass transit emit different levels of GHG, but they all emit less than commuting via personal vehicle. For example, a bus, which has an average seat occupancy of just 28%, emits 33% fewer emissions than a personal car. Employees can use trains, buses, ferries, trolleys, subways, and trams to commute via mass transit. You can encourage mass transit use by offering pre-tax commuter benefits that allow employees to reimburse for their mass transit commuting costs.

• Carpooling. While carpooling to work still includes the use of a personal passenger car, it can take at least one car off the road (depending on how many others are carpooling). You can encourage carpooling by offering a pre-tax commuter benefit that reimburses for the cost of carpooling.

What are commuter benefits?

A commuter benefits plan allows employers to help employees pay for the cost of getting to and from work. There are two types of commuter benefits: pre-tax commuter benefits and post-tax commuter benefits.

Pre-tax commuter benefits allow employees to save money to pay for their commuting costs in a pre-tax account, reducing their taxable income and saving on taxes. Employees can reimburse for the following costs through a pre-tax commuter benefit plan: mass transit, carpooling, and parking near the office or a mass transit center.

Post-tax commuter benefit plans are employer-funded and reimburse for commuting expenses not covered under a pre tax commuter benefit plan. Expenses for which employees can reimburse through this type of account include: bike repair costs, gas stipend, mileage on their personal car, ride sharing services, and more.

What are LSAs?

Lifestyle Spending Accounts (LSAs) are accounts into which employers deposit money for employees to reimburse for approved expenses. These are post-tax benefit accounts, and as such, the employer has a lot of control over how they are structured. The employer can choose employees’ allowance, the expenses for which employees can reimburse for, what happens to any unused allowance at the end of the plan year, and more. 

LSAs can cover a wide-range of expenses such as wellness, professional development, entertainment, remote work, and pet care. They can also be used for commuting-related and environmentally friendly initiatives, including:  

• Bike and scooter shares.

• Bike repair and maintenance.

• Fitness and wellness trackers to encourage walking.

• Fitness equipment, including walking shoes.

• Carpooling and rideshares.

How do pre- and post-tax commuter benefits work?

Once a company decides the type of commuter benefit plan they want to offer, they communicate the details to employees and employees typically have the option to sign up for the benefit during open enrollment. 

If the commuter benefit is a pre-tax plan, the employee will decide how much they want to save from their paycheck each month in order to reimburse for their commuting costs up to the IRS monthly limit. Employers will then take the appropriate amount out of the employees’ paychecks before income taxes are assessed and deposit the money in the employees’ commuter benefit accounts. Once employees incur their commuting costs, they will submit the appropriate documentation for reimbursement using the benefit administrators platform. The reimbursements can be distributed via direct deposit or a mailed check. Some commuter benefit administrators distribute a commuter benefit card for employees to pay for their expenses at the point of service, such as a ticket vending machine. Lively’s commuter benefits include a card that is compatible with tap-to-pay and mobile wallet, enabling commuter benefits to meet commuters where they are.

If the commuter benefit is offered as a post-tax Lifestyle Spending Account employers will determine each employees’ monthly or annual allowance, the types of expenses that can be reimbursed for through the plan, and will typically give employees the opportunity to participate during open enrollment. Once an employee incurs a qualified expense, they can submit the appropriate documentation for reimbursement through the benefit administrator’s platform. The reimbursements can be distributed via direct deposit or a mailed check. Any reimbursements employees receive are subject to income taxes. 

How commuter benefits encourage more environmentally friendly commutes

Employees spend an average of 19% of their annual salaries ($8,466 a year) on commuting costs. If their employer offers them a way to save money on these costs, either through tax savings or direct payment, employees would likely welcome the change required for them to save money. 

Commuter benefits that support environmentally friendly practices like biking to work and taking mass transit signal to employees that environmentally friendly practices are important to the company and part of company culture and values. Employees that want to “belong” at work will be encouraged to engage in the activities that are seen as part of the company’s culture and values.

How can LSAs help the office to be more environmentally friendly?

In addition to commuting, companies can use LSAs as a reward for being green. Examples of encouraging environmentally friendly behavior include:

• Hosting onsite e-waste recycling. This can be either ongoing if the employer has a large enough office or can be an event that’s held multiple times throughout the year. Employees who recycle old tech can be rewarded with LSA deposits.

• Hosting a walk or bike to work challenge, or even simply an activity challenge that asks employees to get in a certain number of steps, with the reward of LSA dollars, can encourage these environmentally friendly ways of commuting. 

• Provide an LSA that reimburses for green products and services. 

• Set up a carpooling channel in your workplace messaging system. Encourage employees to connect to those that live near them and carpool in to work by rewarding those employees with LSA deposits.

Achieving an environmentally friendly office can start with the benefits a company offers and the goals those benefits are crafted to achieve. In addition, businesses can strive to create sustainable and green products and services, maintain environmentally friendly workspaces, and encourage these practices at home as well as at work.

If you’d like to learn about Lively’s suite of benefits, including commuter benefits and LSAs that are easy to set up and use, reach out today.