Employee pay and benefits are increasingly being impacted by climate change.

• Green perks are increasingly being included in compensation packages and employee benefits, despite their limited presence in the labor market.
• Companies such as Walmart have invested in e-bike chargers, bicycle racks, and showers for employees who commute by bike.
• Other ideas on the vanguard include employer financial support for home upgrades, EV purchases, and paid leave for weather-related events.

Many workers in the labor market are interested in taking action on climate change, but they often face a significant obstacle: a lack of understanding about their employer's commitment to the issue. To address this issue, green perks or climate change benefits can be used to make these concerns more tangible and actionable in the workplace. While this trend is still emerging, it is becoming increasingly common for employers to offer incentives and compensation packages related to climate change.

Major companies have been focusing on operational efficiency targets, such as Google's carbon-free data centers, in their environmental commitments. From the supply chain to the consumer end market, companies like Apple have made carbon-neutral products. Some companies, like Patagonia, have taken a brand stance in fighting climate change. Additionally, executive bonuses at companies like Apple are tied to ESG performance metrics, making it a norm at the C-suite level.

In recent years, employee benefit packages have primarily focused on health and retirement. However, there is evidence that green benefit packages may become more prevalent in the future. One potential driving force behind this trend is the promotion of eco-friendly commuting options, which can not only appeal to an environmentally-conscious workforce but also lower a company's carbon footprint.

The largest employer in the country has been considering the environmental impact of employees' daily commutes as part of its carbon footprint, and has been promoting alternative commuting options as part of its headquarters design in Bentonville, Arkansas.

Walmart has prioritized multi-modal and alternative transportation as the future of commuting by offering bike perks for employees, installing chargers for e-bikes and e-scooters, providing bike racks and showers for cyclists, and reducing the design space allocated for parking lots.

In Bentonville, Walmart has set a goal of having 10% of its workforce biking to work, but the target has been challenging to achieve, and has been postponed from 2023 to 2025. Despite the difficulties, Walmart has invested heavily in infrastructure to encourage employees to cycle to work, similar to the challenges faced in promoting the widespread adoption of electric vehicles.

The topic of green benefits is gaining traction among employers, according to Caroline Mangiardi, associate director, health & benefits at the management consulting firm. While the annual best practices survey has traditionally focused on health-care benefits, it began to include a section on climate-related benefits in 2022. Employer attitudes are shifting, with an increasing priority being given to climate-related benefits in the years ahead. Half of employers had considered this concept a low priority over the past three years, but only a third now see climate benefits as a low priority.

Employer-funded home upgrades, EV purchase perks

Mangiardi stated that innovative benefits such as reimbursements for sustainable home upgrades, leave for weather-related events, and bike programs are what make the trend exciting.

The company has committed to increasing the number of EV-charging stations at its financial centers and has offered eligible employees financial incentives for purchasing or leasing a new all-electric vehicle.

While Gen Z workers may lead the charge in promoting social and environmental consciousness in corporate benefits, Mangiardi emphasized that employees of all generations share a commitment to sustainability.

Green perks are being incorporated into some niche firms' business models. According to Lauren Schneider, spokeswoman for Compt, which offers employee expense management that replaces or consolidates existing perks with stipends designed around employee lifestyle spending, these incentives can be green-focused. Though she also noted that it's still early days for the idea. Schneider pointed out that there is a growing interest in climate change benefits, as evidenced by the trending up of Google searches for commuter benefits.

Employers who adopt early could gain a competitive advantage in the benefits space. Schneider stated that the lack of widespread implementation presents a significant opportunity for companies to innovate and lead in this area. By aligning employee benefits with environmental sustainability, companies can not only meet a growing demand for CSR-focused and environmentally conscious employers but also support their employees' holistic well-being.

The 2023 Mercer Transportation Trends report shows that nearly one-third of companies prioritize promoting and facilitating eco-friendly modes of commuting for their employees.

A 'carbon savings account' for work

Lizzy Kolar, CEO of Scope Zero, compared their carbon savings account (CSA) to a health savings account (HSA) for distributing green perks to employees. However, she emphasized that the program focuses on home technology and personal transportation upgrades that drive corporate ESG efforts. The program includes stipends for commuter benefits, biking, EV discounts, and work-from-home expenses.

Kolar stated that the employer's financial contribution to each employee's CSA and the discounts from its vendor marketplace significantly reduce the upfront costs of home tech and personal transportation upgrades. Additionally, a platform designed for this type of perk allows for customized upgrade recommendations, direction of employees to top products and vendors, and identification of relevant utility and government rebates.

Green perks are a benefits area where demand seems to outstrip supply, and green commuter benefits may be the first indication of a wider adoption wave. As back-to-work mandates continue to gain momentum, there is the opportunity to incorporate the concept into a new work-life balance. The impact of green perks is not yet sufficiently studied, but with green perks, the headlines are smaller than the operational and supply chain commitments from major corporations.

"Our prediction is that within the next few years, the standard benefits will no longer only include healthcare and retirement, but also sustainability," she said.