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The sustainability reset: why net-zero is now a fundamental principle of travel management.


Planet Earth First sign

Back in November, while supporting a customer event at COP26, we saw first-hand how it focussed global attention on the climate crisis and what governments, corporations and consumers should be doing to keep temperature rises to 1.5ºC.


Sustainability is now a societal hot topic after years spent on the margins of international debate. By 2050, aviation emissions could account for a quarter of the global carbon budget that we’ll need to embrace to limit global warming to 1.5ºC. [1]


As of November, sixty of the UK’s FTSE 100 companies had signed up to the United Nation’s Race to Zero campaign to achieve net-zero carbon emissions by 2050.[2]

Consequently, deciding how travel programs can align more closely with this objective is now a major priority for travel buyers. Their challenge is to balance demands from the fifth floor alongside traveller wellbeing, duty of care and managing costs by minimising demand where possible.


TMCs play a central role, but some are a little late to the party. In April, a survey showed that 89% of travel managers wanted to see their TMCs provide more sustainability services whilst 67% wanted to understand their TMCs sustainability strategies as part of the sourcing process.[3]


The impact of sustainability on business travel, and business travel management, is permanent. There is a plethora of initiatives already in place, from electric cars and sustainable aviation fuel to offsetting. The problem is that the industry’s sustainability initiatives are disjointed, and as the pace of change intensifies, we may come to regret that lack of joined-up thinking.


Chancellor Rishi Sunak reiterated at COP26 that the Treasury would require UK-listed companies to release net-zero plans by 2023. Commitments to systemic change mean that net-zero is now an organising principle for business.[4]


How did we get here?

Anyone who thinks that sustainability in travel management is a new phenomenon hasn’t been in the industry for very long. We’ve been here before. Sustainability has previously dominated the discussion.


Sustainability first came onto corporate agendas in the mid-2000s, when greenwash was rife and words dwarfed action. The then-nascent trend was rudely interrupted by the global financial crisis of 2008 when corporate survival trumped principles or conscience.

As the recovery took hold, corporations began to take the environment more seriously, especially after Greta Thunberg gave an uncompromising voice to the sustainability movement. As climate concern became climate crisis, businesses came under pressure from employees, customers, and their communities to bring about meaningful change. Even then, the pace of change was slow – too slow for many.


Covid-19 was the turning point. Amazon announced it had saved nearly $1billion in travel expenses during the pandemic. [5] Google said it had saved the same amount through employees working from home.[6] Suddenly, there was a business case for not travelling. Post-pandemic, the drive towards meaningful travel is motivated by the need to be seen to protect, the planet, people, and profit.


In the words of one commentator, “…whilst we looked up and longed to see those metal birds on their journeys to long-distance places, we also knew things had changed, possibly forever, and that we couldn’t go back.” [7]


Changing sustainability needs

Commitments to systemic change have made net zero an organising principle for business. EY was the first British corporates to announce it will achieve net zero by the end of 2021, in part by reducing business travel emissions by 35% by 2025.[8]


Net-zero also helps travel managers manage the gradual return of business travel because sustainability controls the release of travel by supporting essential or purposeful travel.

The pandemic has changed procurement’s view of travel. Pre-pandemic, cost was king. Now, the rationale for travel is all-important, which means sustainability is probably as important as cost. People appear prepared to pay a bit more for sustainable services and solutions, of which travel is one element.


As furlough ended, employers want to make sure that workers return in a responsible way, so CO2 output, infrastructure and employees travel will become more relevant. Half of US travel managers expect to focus more on the social and environmental impact of their business travel programmes post-pandemic.[9] It’s unlikely things are any different in the UK.


At Agiito, we are seeing more organisations work towards carbon budgets instead of fiscal budgets. Like us, they have a sustainability ‘owner’, demonstrating that sustainability is a long-term strategy and part of corporate governance.


Actions speak louder

Eventually, sustainability will overtake cost in terms of corporate priorities. In the meantime, actions definitely speak louder than words.


In France, there are no domestic flights under two and a half hours, so people must travel by train. Germany is reducing the number of flights on domestic networks and have rearranged train timetables to feed into long haul flights out of Germany.


If corporates decided to mandate that their people travel by train between London, Glasgow, and Edinburgh instead of by air, we could do the same here.


In 2019, we paper-ticketed over 1.3 million rail transactions, none of which could be recycled because of the magnetic strip needed for paper tickets to work in stations. During the pandemic, we defaulted to e-ticketing for rail and have seen adoption grow from 20% to over 40%. A simple thing that has already had quite an impact.


Now, it’s about avoiding unnecessary air travel, adopting a green fleet and other, greener forms of ground transportation. Rail is front and centre of corporate thinking and becoming greener. Diesel trains are being replaced by electric or multimodal fleets across the network in the UK and Europe.


Defining greener business travel

Pre-pandemic, most organisations put carbon offsetting at the heart of sustainability strategies, in part because doing so requires no behavioural change. Since then, the focus has shifted to smarter ways of working, to the frequency and purpose of travel.

For many of our customers, travel is essential. Whether it’s infrastructure or logistics, these types of trips can't stop. However, they can be done smarter, from trip planning to mode of transportation.


Data is now the most powerful tool at our customers’ disposal. Many know what they spend, and where, but fewer know how or why. We can interpret the data, profile their people, tell them what they can do and what the end results could be.


We are importing, consolidating, and analysing data from multiple sources. This enables us to playback what other organisations do and share best practice. We can use that data to segment audiences for engagement whilst helping the customer organisation to look at things in the round.


We’ve become more proactive in taking our customers beyond offsetting, utilising data and our knowledge to assess how they can avoid or mitigate their carbon footprints. As a TMC, that means addressing how employees meet; identifying green providers and the solutions they offer and making them available to our customers.


Trees4Travel

To reduce their emissions from business travel, corporates first need to quantify them That’s why we teamed up with Trees4Travel in March 2021 to offer customers an innovative, simple, tangible, and affordable CO2 offset opportunity. Previously, companies only used data for standardised average calculation but we wanted to drill down to the granular detail and provide information that supports specific customer objectives like their Scope 3 emissions (indirect emissions that occur in a company’s value chain, such as business travel emissions) and Scope 1 emissions (direct emissions from owned or controlled sources, like company vehicles).


Our customers now have the option to plant trees as they travel, with the carbon footprint of their trips and the number of trees required to offset the travel automatically added to their dashboards. Trees4Travel arrange plantation of indigenous saplings on sanctioned reforestation projects. The trees remove the CO2 from the atmosphere, returning clean air to repair the planet whilst also supporting biodiversity and working towards 13 out of 17 of the UN sustainable development goals[10].


During the last eight months, we have collectively offset 4,543 tons of CO2 for customers across the energy, care, and housing sectors – that number continues to rise every day. Dozens of customers ranging from banking, retail and pharmaceutical to charities, local government, and education, are currently looking at different offsetting solutions.

Working with Trees4Travel, we’ve enabled one customer to offset three years’ worth of historical trips so they can achieve their first ‘Corporate Legacy Forest’ comprising 10,000 trees. Another customer has offset their historical global trip emissions to support the Envira Amazonia Forest Conservation Project in Brazil.


“Through our simple reporting tool, customers can track and report on their emissions and set targets to help them align their travel policy and procedures with their company CSR targets.”

Kirsty Given, Director of Corporate Responsibility & Sustainability at Agiito



Role of the TMC - advocates, evangelist, or facilitator?

Sustainability has brought new stakeholders into travel management. Company Environmental and Social Governance (ESG) leads are working alongside travel managers to reduce demand, reduce emissions, and balance people, planet, and profit better than ever before.


A broader range of stakeholders means that, as a TMC, we can bring together the different parts of an organisation’s contract to decide what policy looks like so that the CEO can understand the financial impact of that policy. We then use our expertise and technology to turn policy into meaningful action.


It's about understanding what our customer needs and how we can help them achieve their targets, then working collaboratively with our partners to pass value and benefits on to the customer. Whether that’s through using greener airlines or green hotel chains, we are putting it all together.


This makes us simultaneously advocates, evangelists and facilitators depending on the maturity of the customer’s sustainability journey. Some know where they want to get to, but not necessarily how to get there.


Anyone can book travel and a lot of people can buy travel, but not many people can manage travel. We’re different because we see the sustainability element of travel as an integral part of managing travel, and therefore part of our core proposition moving forward.


Continuing challenges

Many challenges remain before success can be achieved. Some are sector-specific, others apply across the business travel industry.


Amongst the former, hotels and venues are yet to provide a consistent approach to sustainability. Some are further ahead than others, like Lime Venue Portfolio, who already had a huge focus on food waste and plant elements in their menus before the pandemic struck.

Hotels find it difficult to measure their emissions due to the number of variables, such as tracking which guest leaves the lights on or the water running. They are only just understanding what they can do.


In ground transportation, the tangible obstacles include the availability of vehicles and charging points. The intangible includes taxi drivers wanting to keep on the move; they can't just park up for an hour while they wait for the battery to charge.


For TMCs, the technology challenge lies in presenting sustainability data in a format that enables customers to make sensible decisions or to remove that need by presenting the best options the first time around. This represents our next level of systems integration so that, when making a booking, the traveller can see first-hand how they can use Trees4Travel to offset their carbon.


Users of our online booking tool can already access greener options where we have that information from the travel supplier. TMCs’ challenge is to stimulate suppliers’ appetite to make that information available as standard. The quicker that happens, the faster we can help travellers to make an informed choice based on cost, convenience, and sustainability credentials.


More joined-up

Fortunately, the disparate elements within the supply chain are on the same page. They understand the need for and are receptive to change because they are hearing it from all quarters, customers, suppliers, employees, and family alike.


To realise societal, corporate, and personal sustainability objectives, a more joined-up approach is needed between sectors and the travel industry as a whole.


There should be better direction and support from the government. Industry bodies like the Business Travel Association (BTA), BEAM (formerly HBAA) and Meetings Industry Association (MIA) must also come together to align initiatives.


What success looks like

Many organisations are at different stages of their sustainability journeys, so there are varying levels of success.


The first is a customer having a policy that says, for example, a traveller must take a train, where that option exists, for trips of under four or five hours. The second is a customer committing to action to achieve that policy.


At the next level, it will be a customer being prepared to pay for sustainable solutions. We don't yet know whether the premium will be 10%, 20% or more because It has not been tested in the market.


At the next level, success will be having the infrastructure that enables those solutions to have a real impact. A green fleet is no use if there are insufficient charging points. Smart aviation fuel is no good unless customers know which airlines fleets use smart aviation fuel.

For customers to buy the most sustainable options, they need benchmarks against which to compare performance. Right now, there are too many variables.


Success is all these pieces coming together, from policy to a clear articulation of the policy, to being able to build sustainable programmes by making good choices readily available.


Conclusions

Most business travellers and their employers want to do the right thing, but don't necessarily know what the right thing is or how to do it.


Time will tell whether COP26 proves to be the trigger that will bring aviation, ground transportation and hospitality together. The hospitality sector particularly needs to come together instead of working well in pockets.


The drive to industry standards, whether that’s UK-wide, Europe-wide, or worldwide, must be government-led. Only then can we benchmark how we are doing at a local, national, and international level, and then decide how to do better in the future.


Ultimately, sustainability requires global collaboration, must be consistent and clear deliverables identified that we, and others like us, can serve up to our customers.


 

[1] https://www.fastcompany.com/90632762/its-time-to-reassess-the-role-of-business-travel-in-global-warming [2] https://www.gov.uk/government/news/cop26-sees-uk-businesses-lead-the-world-in-climate-change-commitments [3] https://www.businesstravelnews.com/Management/Study-Buyers-Seek-TMC-Servicing-Sourcing-Changes

[4] https://www.mckinsey.com/business-functions/sustainability/our-insights/cop26-made-net-zero-a-core-principle-for-business-heres-how-leaders-can-act [5] https://www.cnbc.com/2020/10/29/amazon-saved-1-billion-in-travel-expenses-due-to-the-pandemic.html [6] https://www.bloomberg.com/news/articles/2021-04-28/google-is-saving-over-1-billion-a-year-by-working-from-home [7] https://www.businesstravelnews.com/Management/Study-Buyers-Seek-TMC-Servicing-Sourcing-Changes

[8] https://www.ey.com/en_uk/news/2021/01/ey-announces-ambition-to-be-carbon-negative-in-2021 [9] GBTA