The urgency of balancing the planet’s wellbeing with that of business needs has been at the forefront of discussions in the past few years, but actions have been lagging. While companies are at various stages in their journey towards decarbonization, climate change issues affect us all. Rising global temperatures and severe weather patterns can disrupt businesses as well as peoples and populations.
As conversations evolve, so do regulations and solutions. The time to act is now.
Why should travel managers care about emissions and sustainability?
Business travel contributes to a company’s total carbon footprint. Based on your business activity, it can represent a sizeable chunk of your emissions. Emerging new regulations encourage and require businesses to report on their total footprint. Business travel is under the microscope and businesses are being asked to act responsibly, with an eye to compliance.
- In 2023, the Corporate Sustainability Reporting Directive (CSRD) was launched as a European Union (EU) law that requires companies to report on their environmental and social impact, as well as their climate-related risks and opportunities. Some companies will have to report as early as 2025, with smaller businesses only required to comply in the coming years. Any company identifying climate change as a risk will have to report on their business travel emissions moving forward.
- Beyond the disclosure of CO2 emissions data, CSRD also requires companies to include proposals on how to meet their emissions-reduction goals.
- The impact of these CSRD requirements are not limited to Europe; they are also affecting global clients, such as EU subsidiaries of U.S. companies.
- New requirements exist in other countries, too. In the U.S., the Securities and Exchange Commission has adopted rules that standardize climate-related disclosures in reporting by public companies (although these are limited to only scope 1 and 2 emissions). New regulations are also upcoming in Australia, Singapore, Canada, and Japan.
Why should companies care?
For many businesses, obtaining a bottom-line answer to the question, “What is my total CO2 footprint?” can cause a tailspin. There are different methodologies available to measure emissions; the methodology you choose will make all the difference when it comes to your outcome. Here are the steps to take to break this often-overwhelming process down into manageable chunks:
Gather data.
Collect travel data from your TMC(s), and possibly some key suppliers such as car rental providers, to start the process of estimating emissions.
- Air travel generally represents about 90% of emissions in a standard business travel program. The focus should be on capturing your air volume as closely as possible.
- Hotel emissions represent around 3-4% of the total business travel emissions. If you have a high leakage in your travel program, accounting for this might be wise.
- Rental cars represent around 1-2% of the total business travel related emissions.
- Finally, although rail travel generally has a low footprint, it is nonetheless important to capture it. Shifting from air to rail is an easy win to replace your short haul flights. Compared to air, rail emissions on the same route can be up to 99% less polluting.
Choose a methodology.
To allow for more accuracy on emissions reporting, many methodologies have been developed in the market. For example, using the generic emissions factors published by the UK Government – commonly known as ‘DEFRA’ (the UK’s Department for Environment, Food & Rural Affairs) is a well-established starting point. This methodology is also widely used by travel management companies (TMCs). However, using DEFRA is always limited, as it only takes distance and cabin class into account.
Comprehensive methodologies lead to better policy shaping
Using a comprehensive methodology will affect your outcomes and will lead to better policy shaping. For example, when it comes to air, cabin configurations and airline load factors can affect emissions. Aircraft type and radiative forcing can also be included as key elements when assessing aircraft emissions. This helps also track emissions reduction progress when your travelers are using newer aircraft or when your preferred airline renew their fleet on your top routes
A comprehensive methodology can include emissions from not just air, but also from car, hotel and even food. In 2021, BCD’s consulting arm Advito developed a sophisticated methodology called GATE4 that not only measures emissions, but also tracks and monitors them. GATE4 is a granular carbon emissions methodology that is the first travel industry-specific tool to be ISO 14064 and ISO 14065 certified. It encompasses all travel categories mentioned above – air, hotel, rail and car – allowing for a fuller picture of carbon emissions data. GATE4 also possesses the ability to track emissions for the non-traditional categories of a business trip, such as personal car usage for business travel, taxi and rideshare usage, and emissions from meals while traveling. In this case, the emissions calculations are based on expense figures.
Establish a baseline.
In order to build a strategy around emissions reduction, you’ll then have to establish a baseline. This means selecting a reference year which will be your starting point to reduce emissions. While using carbon emissions data from 2019 is more common, 2023 is now seen “as the new normal” when calculating a historical baseline.
Ensure that you connect with your Environmental, Social, and Governance (ESG) team to understand what baseline year was selected for other categories of emissions. Aligning internally is always important. Once you determine your baseline year, you can plan for a strategy to reduce emissions and define KPIs.
Build an emissions reduction strategy.
Once you have a baseline and a methodology in place, you can assess the amount of reductions that is in line with your stated objectives and targets. Always consult your ESG team for guidance on this critical piece of your strategy.
Based on your program, you can identify the levers of action specific to your company; for example, air-to-rail shifts or economy over business class usage. This might lead to a rewrite of the travel policy.
Even if travel does not represent a high share of emissions for your business, it is highly visible internally and thus can be utilized as a tool to build sustainability into a company’s travel policy.
BCD Travel is a leading authority on sustainability and can help you measure and report your travel related emissions. For those who require further support, contact our consultancy firm Advito.
