Carbon Reduction Plan

Introduction

ALD Automotive

ALD Automotive Limited ('ALD') is a subsidiary of the ALD Automotive Group, led by ALD S.A., with a majority ownership by Société Générale ('SG'). Positioned within SG’s International Banking and Financial Services divisions, ALD UK is one of the 43 entities in the ALD Automotive Group. ALD’s objective is to emerge as the leading force in sustainable mobility in the UK, striving to be recognised as the most innovative and responsible mobility provider in the country.

This Carbon Reduction Plan concerns the UK activities of ALD Automotive Limited.

Our corporate strategy – PowerUP 2026

ALD Automotive has successfully completed the acquisition of 100% of LeasePlan, one of the world’s leading fleet management and mobility companies, from a consortium led by TDR Capital.

This transformative acquisition represents a step-change which positions the combined group as the leading global sustainable mobility player with a total fleet of 3.4 million vehicles managed worldwide. By joining forces, ALD Automotive and LeasePlan will lead the way to net zero and further shape the digital transformation of the industry. The combined entity will leverage on scale and complementary capabilities to strengthen its competitiveness and deliver sustained growth.

ALD Automotive I LeasePlan have announced a name change - Ayvens, its new global mobility brand, will roll out during 2024 following the final integration of the business as one legal entity. This final step will unite the two companies together under a single common identity.

This new brand represents a strategic milestone in the company’s development following the launch of its 3-year strategic development plan including its responsibilities for ESG and risk management, through the PowerUP 2026 corporate strategy.

Sustainability governance

The Board of Directors at ALD Automotive UK (the Board) acknowledges its responsibility in overseeing climate change matters within the organisation. While we have made significant strides in integrating climate change considerations into our strategic decision-making processes, we are committed to further enhancing our sustainability and climate change governance.

The Board convenes on a weekly basis, with climate change consistently featuring in meeting agenda’s. The Corporate Social Responsibility (CSR) Manager, who also chairs the ESG Committee, provides monthly updates to the Board on the progress towards sustainability targets.

The committee convenes quarterly to discuss environmental and sustainability matters including the company’s use of renewable energy sources, its waste management program, how it handles potential problems of air or water pollution arising from its operations, and its attitude and actions around climate change issues, alongside the broader ESG framework. The company’s CSR policy, inclusive of climate change considerations, undergoes an annual update and is presented to the Board for approval.

The ultimate responsibility for delivering in the UK operation the Group’s strategy on climate change lies with the Board where climate change is discussed whilst reviewing and guiding strategy. The ultimate responsibility for ESG lies with our HR Director, who also serves as a member of the Board.

Commitment to achieving net zero

At ALD Automotive UK, we believe that acting responsibly is the key to our future. We also believe that, by being part of the solution to the problems our world is facing – from climate change to inequality and beyond – we can bring benefits to all our stakeholders.

As a responsible business, we act to accelerate progress towards a net-zero carbon future. That includes setting robust emissions reduction targets at the pace and scale required by climate science.

Consequently, ALD Automotive UK (through Ayvens’ commitments) has committed to the following environmental objectives:

• We’re committed to a holistic, global approach to tackling environmental, social and governance (ESG) issues
• We are committed to leading the transition to zero emission mobility and aim to achieve 50% of our new car deliveries to be electric vehicles (EVs) by 2026, with battery EVs (BEVs) alone making up 40%;
• We aim to achieve net zero emissions across our operations and value chain globally (GHG emissions scope 1, 2 & 3) by 2050 at the latest and ensure these ambitions are validated by the Science-Based Targets initiative (SBTi);
• We will formally integrate climate-related and environmental risks into our strategy, governance, risk management and disclosures in line with TCFD recommendations and ECB expectations.

Baseline emissions

Our ESG Governance Committee have determined 2022 to be our baseline year. Emissions have been calculated in January 2024 using the GHG Protocol – A Corporate Accounting and Reporting Standard, and the 2023 DEFRA conversion factors. Baseline emissions are presented in Table 1 below.

Baseline Year: 2022

Table 1 – ALD Automotive UK baseline emissions

Control approach

When calculating an emissions footprint, an organisation must choose one of three possible approaches to consolidating emissions from their operations.

• Equity share (accounts for GHG emissions from operations according to its share of equity in the operation).
• Financial control (accounts for 100% of the GHG emissions over which it has financial control. It does not account for GHG emissions from operations in which it owns an interest but does not have financial control).
• Operational control (accounts for 100% of the GHG emissions over which it has operational control).

It was decided that ALD Automotive UK’s emissions would be consolidated based on the operational control approach. This is the most common method of consolidating emissions and reflects an organisation’s ability to introduce and implement operating policies that could affect emissions from operations.

All figures have been calculated by external experts from data provided by ALD Automotive UK.

Current emissions reporting

Table 2 below states our 2022 and 2023 carbon emissions. Please note that at the point of publication, 2023 Scope 3 emissions were in the process of being validated by the external party commissioned to support us. We expect they will be available in the coming weeks, at which point a revised version of this Carbon Reduction Plan will be published.

Table 2 – ALD Automotive UK current emissions

ALD Automotive UK emissions reduction targets

As part of our PowerUP 2026 corporate strategy, a number of environmental targets have been set globally. Those global targets are presented in Table 3. Specific UK targets will be set during 2024.

Preliminary results of Scope 3 emissions, yet to be published, show that emissions linked to our leased fleet are considerably larger than emissions from any other sources. We expect categories 2-Capital Goods, 11-Use of Sold Products and 13-Downstream Leased Assets will account for around 99% of all our emissions.

As a result, our environmental strategy and global and local targets linked to the fleet are key to reducing our emissions.

Table 3 – Global Ayvens reduction targets as cascaded to ALD Automotive UK

Completed carbon reduction initiatives

ALD Automotive UK’s focus on emissions reduction has been embedded across the business for many years. In 2017, ALD Automotive UK achieved Go Ultra Low status for its work on fleet carbon reduction across our company car fleet. In 2018, ALD Automotive UK achieved (the then-highest) gold rating from Ecovadis, and achieved it again in 2019.

In 2020, with the re-categorisation of the ratings, ALD Automotive UK achieved the highest platinum status. This put ALD Automotive UK in the top 1% of business within our sector for environmental issues. These ratings reflect the focus that ALD Automotive UK has had on environmental matters over a sustained period. This was further recognised by our parent company, who ran an internal Global Environmental Award across all 40 countries in 2021. ALD Automotive UK’s submission, which focused on its own company car policy transformation and the methodology used to achieve this, was awarded first place.

Scope 1 & 2 initiatives

We have had great internal and external recognition for our work on reducing emissions, in practice, Table 4 below lists some of our initiatives aimed at reducing Scope 1 & 2 emissions and their impact.

Table 4 – Scope 1 & 2 completed initiatives

Scope 3 initiatives

Although final Scope 3 emissions calculations are yet to be published, it is clear that emissions from our leased fleet are considerably larger than emissions from any
other sources.

The top three of the eleven applicable Scope 3 categories (Capital Goods, Downstream Leased Assets and Use of Sold Products) will likely account for 99% of our entire carbon footprint (across all scopes).

A key component of our environmental strategy has therefore been focused on the reduction of our leased fleet’s carbon footprint; and carbon reduction initiatives supporting the transition from the Internal Combustion Engine (ICE) vehicles to Electric Vehicles (EV) are core to this strategy.

As a result of these initiatives aimed at supporting our customers through the transition to EVs, we are proud to say the percentage of EVs and Hybrid in new car registration in 2023 exceeded 67%, with BEVs accounting for 47%, as shown in Table 5 below.

Table 5 – ALD Automotive UK current emissions

Key initiatives were laid out in our Move 2025 strategy which has now been replaced by PowerUP 2026 following the acquisition of LeasePlan. The Move 2025 initiatives are still ongoing and now form part of the wider PowerUP 2026 strategy, described in the next section – Ongoing and Planned Initiatives.

Ongoing and planned initiatives

ALD Automotive UK’s ISO 14001 certified Environmental Management Systems (EMS) ensures that all environmental aspects and risks linked to our operations are identified, assessed and continual improvement initiatives planned and delivered. Below are the key carbon reduction initiatives currently underway.

Green audit (reducing Scope 1 and 2 emissions)

A green audit of our facilities was conducted in 2023 to help us identify further areas for improvement. This audit identified four areas where our environmental impact could be reduced. The following projects are currently under review and consideration by the Board:

• Voltage optimisation – potential annual reduction
  of 11 tCO2e.
• Energy optimisation thermostat – potential annual reduction of 11 tCO2e.
• Solar panels – potential annual reduction of 14 tCO2e.
• Solar car ports – potential annual reduction of 59 tCO2e.

Reducing tailpipe emissions of the funded fleet (reducing Scope 3 emissions)

Given that around 20% of global GHG emissions come from road transport, ALD Automotive UK recognises the important role it has to play in tackling climate change through the transition towards zero emission mobility. We have committed to taking a leadership role in the transition from internal combustion engines to alternative powertrains, in support of the Paris Agreement. That’s why ALD Automotive UK is committed to achieving global targets of 50% of new car deliveries being Electric Vehicles (both battery operated and hybrid vehicles) and 40% of new deliveries being Battery Electric Vehicles (BEVs).

In fact, accelerating the uptake of EVs, and providing the infrastructure required to make them a viable option for customers and employees, is ALD Automotive UK’s single most important lever for reducing its GHG emissions.

ALD Automotive UK has made strong progress towards this goal, with EVs (both battery operated and hybrid vehicles) accounting for 67% and BEVs accounting for 47% of all new vehicle orders in 2023.

At the point of publication, local UK specific targets had not yet been set. We expect those targets to be determined in the latter part of 2024.

ALD Electric

ALD Electric takes a holistic approach to the powertrain shift, offering tailored support across all aspects of the electric journey. We have designed a suite of 14 products and services to make your transition to electric vehicles easier. Through ALD Electric, we work with customers to identify and support their organisations’ unique journey along the Road to Zero,

Our strong leadership in the transition to sustainable mobility is made possible by this programme, key features of which include:

Technology

•  TCO+: Where standard TCO covers rentals, fuel, tax, insurance, and basic maintenance, TCO+ goes further by analysing vehicles’ actual performance, measuring: 

• • Vehicle Off Road (VOR) downtime.
  • Cost of EV transition and related infrastructure.
  • Vehicles’ long-term reliability based onmanufacturers’ perform

• Journey Profiling (JP): JP helps customers select the best EV based on their bespoke needs. By understanding the unique journeys of individual drivers (including mileage and payload), JP can calculate a bespoke pence-per-mile figure, which combined with TCO/TCO+, provides a total cost of operations, using tailored metrics to ensure optimal fleet operation.

• Net Zero Programme: We have developed Net Zero, a tool that allows customers to set a deadline for net zero and then model different routes (slow, medium, fast) to achieving that goal.

Education

The ALD Electric proposition includes several educational support tools, hosted through a central ‘Future of Fleet Mobility Hub’ These include:

• EV Primer: a guide to support transition to an EV fleet.
• Future of Fleet Mobility Trends Report: supporting customers in planning their future mobility and decarbonisations policies.
• PESTLE: a guide on the key factors influencing the UK and global market in a fleet context.
• Mobility Matters: webinar on demand, addressing EV market and usability questions to educate and inform customers.
• Fleet Guides: to support transition and provide customers with advice and knowledge.
• Downtime: We’re educating customers on how they can reduce downtime, as well as raising awareness of the role driver behaviour has in keeping vehicles operational (e.g. adding parking sensors).

Strategic EV partnerships

• To expediate our EV transition, we’ve formed EV strategic partnerships with Tesla, Kia, Ford, and Polestar.
• Partnerships with charging infrastructure providers to support workplace charging, home charging, charging in public areas and destination charging.

Advocacy

As a responsible global organisation, ALD Automotive UK works with leading international NGOs, including the World Economic Forum (WEF), the World Business Council for Sustainable Development and the BVRLA to promote policies to accelerate the uptake of EVs.

ALD Automotive eLCVs

In addition to the tools described in the Electric Programme above, we have a number of initiatives in place to encourage and support the transition to electric Light Commercial Vehicles (eLCV) specifically.

Flexible leasing: Along with scale (we command the UK’s largest flexible van leasing proposition), we’ve reduced minimum terms from 90 to 28-days, and we still allow customers to ‘try before they buy’. We’ve also added different LCVs to the fleet, including Chapter 8, traffic
management, welfare, and refrigerated vehicles.

Build management solutions: We’ve enhanced our conversion capabilities by:

• Implementing a dedicated Build Management team.
• Improving supplier relationships, enhancing the customer experience, and ensuring vehicles are delivered on time to agreed specification.

Mobile Servicing: To circumvent limited garage availability, we’ve developed a mobile servicing solution by partnering with several trusted suppliers.

Vehicle Utilisation Team: While our regular downtime management service covers 99% of VOR situations, we’ve expanded our Vehicle Uptime (VUE) team to resolve the most complex issues by working with manufacturers/ suppliers directly.

Made for Trade: Many trade SMEs acquire a vehicle from us and, upon delivery, arrange a third-party conversion, resulting in immediate downtime. Utilising our LCV experience, we’ve designed a set of pre-configured conversion options that can be easily added to their lease, meaning vehicles are delivered commercially-ready.

Education:

• Fleet Funding and Taxation guide: We’ve developed a guide on how the UK’s tax system affects company vehicles.

• LCV training: We’ve:
  • Developed an online LCV course for new-starters
    (163 completions).
  • Provided face-to-face LCV refresher sessions to
    >100 colleagues.
  • Held a Commercial Vehicle Day to educate >300
    colleagues.
  • Produced LCV terminology guides for customer facing
    colleagues.
  • Developed an eLCV Playbook.
  • Developed an LCV Build Playbook. Appendix-3.

Top Management focus on Sustainability: When two of the largest leasing companies (ALD Automotive and LeasePlan) go through a merger on an unprecedented scale in the sector, it would be understandable if something like decarbonisation was deprioritised. Yet the reverse has been true.

Along with a complimentary offering, ALD Automotive and LeasePlan (ALD|LP) share a passion for decarbonisation. This shared ambition was a major driver of the merger and has also acted as a unifying force throughout the year.

In order to deliver the PowerUP 2026 Strategy, the governance structure has been amended and changes are currently being implemented. As part of these changes, a new Sustainability role has been created: ‘Head of Environmental, Social and Governance (ESG)’. The new Head of ESG will be responsible and accountable for driving the development and implementation of the environmental strategy within ALD|LP UK, supported by CSR and Facilities managers.

Reducing our carbon footprint to net zero Science Based Targets: In order to align ALD Automotive’s decarbonisation ambitions with climate science, we signed up to the Science Based Target Initiative (SBTi) and announced our commitment to reducing Scope 1, 2, and 3 emissions to net zero in a way that is consistent with reaching net-zero emissions through eligible 1.5°C-aligned pathways. The SBTi is an independently verified programme and as
one of its members, ALD Automotive UK has committed to the targets laid out in Table 3 above.

The SBTi submission will need to be revised and reprocessed for the combined entity (Ayvens) once the merger is complete. At that point, global targets may be revised.

We expect exact UK targets and further initiatives for each scope category to be published in 2024, at which point this Carbon Reduction Plan will be updated accordingly.

Declaration and sign-off

This Carbon Reduction Plan has been completed in accordance with PPN 06/21 and associated guidance and reporting standard for Carbon Reduction Plans.

Emissions have been reported and recorded in accordance with the published reporting standard for Carbon Reduction Plans and the GHG Reporting Protocol corporate standard and uses the appropriate DEFRA emission conversion factors for greenhouse gas company reporting.

Scope 1 and Scope 2 emissions have been reported in accordance with SECR requirements, and the required subset of Scope 3 emissions have been reported in accordance with the published reporting standard for Carbon Reduction Plans and the Corporate Value Chain (Scope 3) Standard.

This Carbon Reduction Plan has been reviewed and signed off by the board of Directors (or equivalent management body).

Signed on behalf of the Supplier:

Jo Monk HR Director signing on behalf of ALD Automotive UK Board of Directors. Date: 22 February 2024