A strange thing happened when Covid-19 forced nearly every company’s attention toward its business travel practices. At the bullseye of the pandemic, business travel was scrutinised from every angle. Safety – check. Cost – check. Travel patterns – check. Internal – check. Client-facing – check. Effectiveness – for sure. Sustainability? There's an opportunity.
As the travel shutdown morphed into a fundamental restructuring of corporate work and life, now mediated by technology that kept people off the roads and out of the air, even stranger things began to happen. Lake waters became clearer; heavy smog and polluted air lifted over China. NASA began to track the phenomenon and found dramatic reduction in certain pollutants as measured by on-the-ground samples in cities around the world: Wuhan (60 per cent reduction); Milan (60 per cent reduction); New York (45 per cent reduction).
Yet the return to ‘normal’ life as the Covid-19 epidemic eased in China and other locations saw greenhouse gas emissions increase again and at times exceed pre-pandemic levels. The challenge, as we all push toward renewed economic growth, is to find a prosperity strategy that doesn’t pull us back into pre-pandemic emission rates. That won’t be easy. But business leaders BTN spoke to agreed that Covid-19 pushed them to think about structural models that didn’t exist prior to the pandemic and has accelerated a re-think around business processes and how to leave a smaller carbon footprint.
IT'S NOT ALL COVID INDUCED
Sustainable business practice commitments have come in waves. The previous wave peaked in the early 2000s, but for many companies ebbed as the global economic downturn bore down on businesses in 2008. The Paris Climate Accord in 2015 again drew attention to the issue among government and business leaders. The agreement, which grew to include 197 countries, committed participants to work together to fight climate change and defined a baseline goal of limiting global warming to ‘well below’ two degrees Celsius compared to pre-industrial levels and to actively pursuing efforts that would limit the increase further to 1.5C.
The climate accord hasn’t escaped controversy, particularly in regard to US participation. The Trump administration announced in 2017 its intention to pull the country out of the agreement. Due to safeguards built into the accord precisely to forestall what was considered uncertain US commitment from the beginning, the country which emits 15 per cent of global greenhouse gas emissions did not formally leave the accord until 4 November, 2020 – ironically, the day after the US election that determined a shift to a new administration. President Joe Biden rejoined the accord on 19 February, 2021, less than a month into his presidency and has made fighting climate change a central pillar of both his domestic and foreign policies. Global leaders must now grapple with how long that re-commitment will last in a polarised political climate.
For the business community, however, government commitment to the Paris Climate Accord notwithstanding, a reckoning regarding its contribution to climate change emerged in 2018 and 2019 fixed in the unflinching gaze of Swedish teen activist Greta Thunberg. Her one-person protests and eventual high-profile speeches at the United Nations inspired a social upheaval and massive environmental protests in cities around the globe. It pushed a particular indictment of the travel industry, coining the term ‘flygskam’ – or shame in flying. BTN named Thunberg among the Most Influential People in Business Travel in 2019 for the focus she brought to environmental issues surrounding travel in general, but also to business travel and influencing how companies considered making business travel practices more sustainable.
“Small changes can have a big impact when it comes to climate change, especially when those changes are made by large global corporations. We’re moving beyond our employee impact, towards using our influence to drive industry-wide shifts reducing air travel emissions”
Eric Bailey, global director of travel
THE EARLY MOVERS
Microsoft was an early mover in the drive toward sustainable business travel practices. The technology giant has offset all business travel emissions since 2012, according to global director of travel, meetings and payment Eric Bailey. In 2019 the company joined a partnership with KLM to support sustainable aviation fuel production as a way to increased demand for and invest in the future of sustainable travel. The company has since signed a similar commitment with Alaska Airlines. Upon joining the KLM programme, Bailey underscored the role corporations and powerful travel managers have in accelerating sustainability efforts in the travel industry.
“Small changes can have a big impact when it comes to climate change, especially when those changes are made by large global corporations,” he said in October 2019. “Today represents a step change, where we’re moving beyond our employee impact, towards using our influence to drive industry-wide shifts reducing air travel emissions.”
Several other companies joined the KLM programme. In 2019, the airline had signed 14 organisations, including big corporate travel names like Accenture. In 2021, that number has inched up to 16, and other SAF efforts focused on business travel and corporate partnerships have also emerged.
United announced an Eco-Skies Alliance with initial participation from 11 corporate partners including Autodesk, BCG, CEVA Logistics, Deloitte, DHL, DSV, HP, Nike, Palantir, Siemens and Takeda Pharmaceuticals. The collective will help United buy more than 3.4 million gallons of SAF this year.
Another alliance announced recently by EMI and the Environmental Defense Fund is the Sustainable Aviation Buyers Alliance. The group will focus on standards, SAF emissions accounting and policy, and will additionally work on reducing barriers to innovation and achieving production at scale, as well as SAF certification and investment opportunities. Founding members of the alliance include Boeing, BCG, Deloitte, JPMorgan Chase, Microsoft, Netflix and Salesforce.
Investing in SAF, which has long been a focus for the airline industry, is just one way to reduce business travel emissions.
Throughout 2020 and into 2021 companies have declared their commitment to science-based targets and achieving net zero emissions, often tied to the 2030 deadline set by the Paris Climate Accord. Again, first-mover businesses like German multinational manufacturing and automation company Siemens set the stage for these types of commitments back in 2015, but others have joined. Among them, are the major global accounting firms, which are some of the biggest spenders globally on business travel.
Accenture committed to a net zero emissions target in December 2018 and by October 2020 tied that target to a 2025 timeline. BCG announced its goal to be net zero by 2030 in September 2020. Deloitte and PwC followed that path just two weeks later each with its own declaration. EY, which had previously announced goals for carbon neutrality in 2020, declared its net zero ambitions in January 2021, with the same 2025 deadline as Accenture. McKinsey & Company joined the group in March this year.
Both Deloitte and McKinsey called out business travel in their emissions reduction targets publicly available at Science Based Targets (sciencebasedtargets.org), an initiative that assists companies in setting science-based greenhouse gas emissions reduction targets to achieve net zero goals. Deloitte’s targets include reducing scope 3 GHG emissions from business travel by 50 per cent per full-time employee by 2030 from a 2019 base year. The firm additionally has committed to ensuring 67 per cent of its business travel supplier partners will have science-based targets by 2025. McKinsey has committed to reducing scope 3 GHG emissions from business travel by 30 per cent per full-time employee by 2025.
Companies on the SBTi website have committed to GHG emissions reduction and they have 24 months to set science-based targets as evaluated against the SBTi criteria or they are removed from the registry. In 2018, just 100 companies had registered for the initiative. As of October 2020, there were more than 1,000 companies registered across 60 countries. Several companies BTN spoke to – Salesforce and Novo Nordisk are profiled in this issue – cited their commitment to science-based targets as evaluated by this initiative.
Yet the companies name-dropped above – and many that have signed up to science-based targets – can’t yet be considered typical in their focus on sustainability. Rather, they are among the vanguard of corporations making the highest levels of commitments, undoubtedly out of sincere concern about climate change but also, for some, with a clear commercial upside that not every company can use to accelerate investment in sustainable practices.
But companies don’t have to be at the vanguard to make a difference. Even the SBTi initiative recognises this: small and midsize companies can participate and have a simplified process for setting emissions reduction targets.
REDUCING EMISSIONS IS A JOURNEY
Most companies begin their GHG emissions reduction efforts with a focus on Scope 1 and Scope 2, which are defined in order as: 1) direct emissions from owned or controlled sources, and 2) indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting company, according to UK-based Carbon Trust. Scope 3 includes all other indirect emissions that occur in a company’s value chain, including business travel.
Companies with a large percentage of emissions tied to business travel – like consulting and professional services companies – might prioritise Scope 3 emissions reductions over other targets or run that priority simultaneously. One reason is that Scope 1 and Scope 2 emissions force businesses to look at their internal practices and not only the practices of their supply chains when it comes to reduction.
International law firm Hogan Lovells committed to a science-based targets initiative in December 2020. Global travel manager David McDonald, who is just beginning the firm’s journey toward sustainable business travel, pointed out it was important to get your own house in order first before reaching out to suppliers to contribute to the cause.
“We have started crafting a series of questions and requirements that we would add into RFPs and/or contracts to wrap rigour around some of our expectations,” he said. But in terms of conversations with suppliers, McDonald isn’t there yet. “The one thing I find very important – and all of us at the firm agree – if we go to go out to our vendors and expect them to deliver against responsible business goals, we should know what we are doing ourselves and live in the same spirit of what we expect from suppliers. Will we be fully mature? Doubtful. But we need to know how we will measure and manage.”
This attitude was quite different from one registered by a leading US-based buyer who spoke with BTN at an advisory meeting in mid-2019. She indicated her sustainable business travel strategy would rely almost totally on pushing suppliers to pass along their GHG emissions reduction bona fides and to deliver more sustainable services. She characterised the process as a ‘checkbox’ exercise that would enable her CEO to create talking points for investor meetings. Plenty of companies are still at that point – 11 per cent according to BTN’s survey (more than 20 per cent who say they are tasked with reducing travel don’t ask for any supplier information). That said, her company at the time had no sustainability-focused leadership so any efforts towards establishing sustainable travel practices were hers alone to manage, perhaps in cooperation with her TMC if that could be prioritised in the budget.
In canvassing several travel buyers for this issue, it became clear that executive-level commitment to mitigating climate change was the foundation for an effective sustainable business travel strategy. Collaboration between business travel and a sustainability leader who would help define strategy and contribute to decision-making around effective projects to pursue provided travel managers with the scaffolding required to make dramatic changes to their programmes. That said, nearly half of travel buyers who participated in the BTN survey had not been formally tasked with either assessing or mitigating carbon emissions associated with business travel.
Still, 71 per cent of buyers said they were personally concerned about their company’s carbon footprint from travel. Several buyers in this category said they were doing what they could to mitigate that footprint – even without leadership support.
Demand management will be a key pillar for travel programmes moving forward, as confirmed by several surveys BTN has conducted over the past year, and the recent sustainability survey was no exception. Nearly three-quarters of buyers said they would shift some portion of business travel to virtual meetings – with or without a mandate to reduce carbon footprint.
Others working solo on carbon reduction had more specific carbon mitigation efforts on the books. A procurement manager at a US-based international law firm, who previously worked at an alternative fuel company, created a rail programme for travel within the Northeast Corridor to divert travellers from emissions-intensive short-haul flights “and frankly give them more convenient options,” they said. These types of one-off projects count toward total emissions reductions, so when opportunities arise, travel buyers shouldn’t be afraid to take them, even if they aren’t formally credited as a sustainability move.
Sometimes, however, it pays to think bigger, even without a direct mandate to do so. FLSmidth global travel manager Merete Minnet is taking this approach. While the Denmark-based multinational engineering company has signed on to science-based targets to reduce GHG emissions, business travel isn’t anywhere on the radar for those efforts.
She said of the company’s work providing solutions to cement and mining plants, which are particularly emissions intense industries. “So getting to zero emissions will come from providing better solutions to customers and Scope 3 becomes a much lower priority. But I’m still working on it and looking into it.”
FOCUS ON TRAVEL
The reason, she said, is because she wants to be prepared. Given that her company has pledged emissions reductions, she believes leadership will come knocking eventually for her to contribute to the cause. “One day they will come to me and say, ‘We need zero emissions when we fly.’ I need to be able to say, ‘Yeah, we can do that if we do this, this and this. And it will cost this.’”
Minnet has already had a handful of travellers come to her to ask about offsetting carbon emissions for flights or taking a direct flight instead of a connecting one to save on emissions. And though the company still isn’t travelling much because of Covid-19 risks, she’s aware her current key performance indicators are not aligned to support sustainable travel options.
Carbon consumption is featured in the company’s Egencia booking tool, so she knows she will need to respond to enquiries from travellers when the company begins travelling again in earnest. She and her Egencia account managers are modelling different scenarios to understand different options –including the option to disable that feature until FLSmidth is ready.
“We’re looking at our top city pairs out of Denmark and other countries and looking at the difference in both price and carbon emissions on direct flights and the stopover options. Currently, our policy is to take the stopover if it’s less than a four-hour difference. I want to know the cost and the emissions savings to understand what would happen if we changed that policy. Then, I could send that model to management. Nothing is free.”
She’s also looking at hotel partners to understand if any of them have sustainability initiatives. She said it’s not likely because FLSmidth locations tend to be outside of city centres and their top hotels aren’t always the big brands. “Those are the hotels that will have sustainable options first, but those aren’t generally the ones available in our locations. Do I put travellers in a hotel further away because it’s sustainable and then make them drive or take Uber, adding a commute? Does it have to be Uber Green?” she asked. The calculus gets complicated.
She has also considered what happens if she takes certain options out of the booking tool entirely – non-sustainable hotels or flights that are less sustainable than the same route on another airline. “I have nearly 100 per cent compliance on flights in my booking tool. I don’t want to make changes that would sacrifice that,” she said. Her TMC partner is working with her to understand these implications and create scenarios that are, well, sustainable.
MORE TMCs ON BOARD
Egencia head of associate client services Virginie Pouget said Minnet is not alone and that many companies are at the same stage in the process.
“Our customers are incredibly interested in the insights and data gathered on their current travel programmes and how they can reshape them to be more sustainable,” Pouget said. “Collecting the data is one aspect but providing clear insights and next steps for the business can be difficult. Egencia’s Analytics Studio intuitively brings data together making it a lot more digestible and easy-to-understand for businesses. The platform also highlights CO2 emissions in response to travel options and journeys. This data, especially right now, is what business leaders want to see and act on quickly.”
Nearly 70 per cent of the respondents to BTN’s survey relied on their TMC and booking tool partners to provide the data and decision-making support required to plan for sustainable travel. Direct engagement with travel suppliers or carbon offsetting companies were much less frequent, at this point, leveraged by about 31 per cent and 20 per cent of survey respondents, respectively.
TMCs are clearly aware of the shift to sustainable travel practices and are ramping up their own credentials in the space.
American Express Global Business Travel (GBT) pledged last year to become carbon neutral. The company expanded that initiative to clients this year, offering preferred terms for carbon offsetting projects through Carbonfund.org Foundation and Carbon Footprint. And in May, GBT announced a partnership with Shell Aviation that will allow clients to buy sustainable aviation fuels for their business travel needs.
BCD, meanwhile, was the first TMC to sign onto the Science Based Targets initiative. The company’s Advito consulting division has received ISO certification for its Gate4 emissions scale, which assists customers in tracking emissions across air, hotel, rail and car modalities to gain a holistic emissions picture of their respective travel programmes. The company also touts its SolutionsSource partners in helping clients to mitigate business travel emissions.
New entrants like TripActions and TravelPerk are also getting into the game with emissions calculators and sustainability filters within their booking platforms. It will be interesting to see how traditional TMCs build commercial models around sustainable travel, when recommending that companies not travel becomes as important as recommending that they do and how they do it.
TravelHorst Sustainable Business Travel Consulting founder, Horst Bayer, is eager to see the larger industry develop its expertise in sustainability and truly understand the opportunities for science-based transformation.
The industry has to rethink everything. We need standards and we need better science to help us make airlines and hotels more sustainable
What he doesn’t want to see is a business travel industry that stops travelling. As some companies tout extreme ambitions with technology alternatives to business travel, even Bayer has taken a pause.
“We are starting at zero [given the pandemic], and we don’t need to go back to 100 per cent of our travel,” he said. “I do think that companies now are at a point where they see they have made it a year with no travel, but now even I am saying ‘travel is important.’ I see people, my industry colleagues, losing their jobs. I know that travel is important to the economy. Traveling is important to our businesses and to our business relationships. So we have to understand that this is about a balance. It’s people, planet, profit. And we have to work in that order.”
Rather than halting business travel, he said, corporates and travel managers should prepare to play a huge role in changing the travel industry because demand for sustainable solutions will catalyse innovation.
“They do need to demand that their suppliers provide solutions and verifiably sustainable products to business travellers. They have that power, and they should use it.”