Salary sacrifice and sustainability: How employers can navigate carbon offsets with EV vehicles
For employers looking to reduce their environmental impact, the cars their people drive is one of the most important considerations. Unsurprisingly however, it’s not entirely straightforward, so here’s a rundown of all you need to know.
As a backdrop, we need to clarify that although electric cars produce no tailpipe emissions, the electricity used to charge them can still have an associated carbon footprint. On the other hand, petrol, diesel and hybrid vehicles do produce tailpipe emissions.
Helping employees make a lower emission choice
A salary sacrifice car scheme allows an employee to exchange part of their salary for a car through their employer. Employers can elect to offer all electric vehicles (EVs), or EVs alongside other fuel types. Either way, costs such as insurance, maintenance and breakdown cover are included in the monthly amount.
Tusker's own customer orders show how much choices have changed: 17% were electric in 2019. This has risen to 80% in 2026.
It’s important to note that a switch from a petrol or diesel vehicle to an EV eliminates tailpipe emissions from a car. It doesn’t, however, eliminate the emissions associated with generating the electricity used to charge it or those involved in making the vehicle.
How can employers work out what to offset?
Data is calculated for every car (EV, petrol or hybrid) over the lifetime of an agreement, using the vehicle's CO₂ emissions, projected annual mileage and contract length.
For electric cars, providers can estimate the emissions associated with charging from the grid. UK grid averages are used rather than assuming a driver charges using a green energy tariff. This provides a conservative basis for the amount offset, including for drivers whose individual charging arrangements are unknown.
It’s important to clarify that an EV has zero emissions at the tailpipe, but that is not the same as zero emissions from driving it when charging needs to be considered. A good EV salary sacrifice scheme should acknowledge the remaining impact and explain how it has calculated an amount to offset.
What happens after the calculation?
It’s important that this process carefully selects and then funds carbon offsetting activities that avoid, reduce or remove greenhouse gas emissions elsewhere.
As the fleet becomes increasingly electric, charging-related emissions are playing a much larger role in our overall emissions profile. With more than 80% of Tusker's fleet now electric, understanding and accounting for charging emissions has become an increasingly important part of measuring environmental impact.
Clarifications for employers
The immediate benefit for employers is to offer its employees a car scheme that combines access to lower tailpipe emission vehicles, while offsetting emissions.
Tusker’s calculations provide highly useful information for employers' sustainability reporting and discussions with employees and stakeholders. However, employers do need to be precise about what this means.
It’s important to clarify that cars supplied through the scheme have their calculated tailpipe and grid charging emissions offset by Tusker. It should not be assumed this makes its whole workforce's travel, its entire fleet or the business itself carbon neutral. Any treatment in the organisation's own emissions reporting needs to follow its reporting approach; ie an offset is not automatically a reduction in reported emissions.
Other important considerations include:
- An EV removes exhaust emissions on the road, while charging still has an associated impact that is calculated and offset. For petrol, diesel and hybrid cars, offsetting does not stop emissions coming out of the exhaust. The strongest environmental case, without doubt, is to reduce emissions where possible.
- Vehicle manufacturing emissions are not included in Tusker calculations. Offsetting covers vehicle tailpipe emissions and grid charging emissions only. This matters when describing a car as “carbon neutral”: the phrase can suggest its entire lifecycle has been covered.
For employers, the message is a practical one. A car benefit can help employees move towards electric driving, and its salary sacrifice car benefit provider needs to take responsibility for calculating and offsetting specified emissions associated with cars on its scheme.
This accurate reporting means customers gain strong, credible details of how they contribute to overall sustainability plans. And that’s a win for us all.
Supplied by REBA Associate Member, Tusker
Tusker is the UK’s leader in salary sacrifice cars. Part of Lloyds Banking Group, it has more than 15 years’ experience in offering an affordable way for employees to drive a new, fully insured, and maintained car. Its scheme, which is available to over 1.8 million UK employees, offers a range of options, from pure electric cars to hybrids and even traditional petrol and diesel vehicles. It provides a tailored scheme for organisations’ individual needs.
