Is sustainability a priority in the current climate?

Is sustainability a priority in the current climate?

As face-to-face meetings and the international events circuit spring back to life, corporate travel is on the rise again. In the rush to recover lost business revenues, however, will sustainability be seen as an essential ticket to success, or simply an add-on?

 

 

 

The slow post-pandemic return of international corporate travel, in particular, might signal some uncertainty in the marketplace about future expectations for demand and spend. One message coming through loud and clear, however, is that face-to-face still matters to business. Almost three quarters of the SAP Concur survey respondents (71%) identify in-person client meetings as the key driver for corporate travel programmes at global level.

Furthermore, events, exhibitions, expos and industry conferences — where the opportunity presents itself to do business in-person and network productively with industry peers — constitute the second top-ranked motivation for corporate travel (64%).

There is no blank chequebook available for corporate travel, nowadays, however. Decision-makers are under more pressure than before, with most acknowledging their budgets have been impacted, adversely (64%). The requirement to demonstrate a return-on-investment (ROI) also now appears more important than ever (65%).

So, in the current climate, is sustainability becoming an unaffordable activity?

Relationships, brand and reputation

There are still strong reasons to make these in-person encounters sustainable, in terms of both business partnerships and brand positioning. Forging relationships with like-minded organisations is regarded as being a core benefit of a more sustainable travel programme by over half the survey (56%). It can help generate positive brand awareness and reputation externally, which is seen to be almost as powerful in terms of motivation (55%).

At a more operational level, goals for corporate travel programmes resonate strongly with stated objectives of the wider sustainability agenda. The SAP Concur research highlights a growing proportion of companies with key targets for energy saving (63%), plastic reduction (55%) and cutting carbon (46%). Carbon offsetting is another practice gaining support (37%).

 

In effect, there are both brand opportunities and commercial imperatives in play here, explains Pierre-Emmanuel Tetaz, EMEA SVP and General Manager at SAP Concur:

“As we look at the post-COVID world of business travel, one thing is clear: we need to make the industry more sustainable for both people and the planet without neglecting profits. But we can’t manage what we can’t measure. Based on data, better travel choices and a clearer link between business travel and ROI, sustainable business travel will no longer be just another option on the menu; it will be the only way forward.”

So, the potential for alignment is plain to see. What is less clear is whether the reality of sustainability performance matches up. In short, do companies walk the talk?
 

ESG funds driving the agenda

In principle, integrating environmental, social and governance (ESG) factors into core business strategy is now a given. Almost no sector can ignore the strong steer coming from financial markets, with a record $649bn of investment sunk into ESG-focused funds last year. ESG funds now account for one in every 10 such assets worldwide.

The hospitality industry is already feeling the heat, says Lucia Loposova, Executive Director at GREEN Hospitality, a not-for-profit collaborative platform for sustainability in hotels, restaurants, airlines, tour operators, corporates, plus related supply chains:

“We are observing a trend of trying to stay abreast and secure business by adopting sustainability strategies. The force behind this is the demand from the corporate partners and their ESG policies to apply this lens when engaging in corporate travel.”

As with the wider sustainability agenda, however, it is in practice that issues tend to arise. Adopting the right approach to implementation and reporting accurately on operations and outcomes appears to be where organisations start falling short, and potentially foul.
 

Good intentions only get you so far, before ‘greenwishing’ can turn into ‘greenwashing’.

Counting carbon in supply chains

Seriousness of intent can come into question when calculating carbon footprints, for instance. Emissions are categorised under three different ‘Scopes’, numbered 1, 2 and 3. Scope 1 covers direct emissions from owned or controlled sources. Scope 2 encompasses indirect emissions from purchased electricity, heat and steam. The more challenging one to assess, however, is Scope 3, which is where all the remaining indirect emissions are to be found, in the supply chain.

For corporate travel, the need to report on Scope 3 emissions will become a critical factor for supply-chain management, explains Professor Xavier Font, Director of the Centre for Sustainability and Wellbeing in the Visitor Economy, at the University of Surrey, UK:

“Corporations will require travel agents and suppliers to account for the carbon footprint; and for these suppliers to provide a frictionless reduction of that carbon. Corporations will not want to be given choices for high- or low-impact travel, they will simply want the suppliers to provide the same quality, price, convenience and location; but, at a lower carbon footprint. And they will want reliable metrics on carbon that allow them to report progress made.”

At the end of the day, it all comes down to the data, adds Professor Font:

“Companies need data to report on their Scope 3 emissions. This data needs to be integrated through the supply chain and reported back to these corporations, and the accuracy of this data will improve while the costs of collecting decrease.”

So, if corporate travel is serious about calculating and cutting carbon, managing its supply chain impacts is a must. Unfortunately, the survey results expose glaring omissions here.

Less than a third of travel managers even consider the sustainability of suppliers — such as hotel, car rental and airline services — when organising corporate travel trips (30%). Fewer still, less than 1 in 4, would describe their organisation as proficient in factoring the sustainability of their third-party suppliers into the travel equation (23%).

These low scores serve to undermine the idea that climate action is embedded sector-wide.

‘Bleisure’ in a Climate Emergency

Also surprising is the finding that higher priority is given by decision-makers to business leisure, or ‘bleisure’ (41%), than either the sustainability of third-party suppliers (30%), or even the greenhouse gas emissions themselves (29%).

For the corporate travel sector, this combination of a reluctance to take full responsibility for supply-chain impacts, plus an inclination to prioritise leisure preferences ahead of planetary concerns, starts to paint a picture of an industry slipping worryingly out of step.

The findings point to a lack of alignment with UN Sustainable Development Goals (SDGs) and a disconnect with public demand for business accountability in a climate emergency.

So, how can corporate travel turn things around and get serious about sustainability?

From verification to visibility
 

In fairness to those in travel and hospitality, sustainability is a complex concept and, even for professionals, it requires a lot of research to navigate, argues Lucia Loposova:

“While there is greenwashing, not all of it is intentional. Transparency in the supply chain remains an issue, but there is some innovation happening that might simplify the verification process for the hospitality industry.”

Amongst initiatives hitting the mainstream last year were the inclusion of sustainability information about hotels in search engine results, plus the Travel Sustainable programme and badge introduced by Booking.com, alongside the Travalyst coalition.

For corporate travel, as well as a necessary injection of education and leadership, the use of tools and data to provide 360° visibility can greatly enhance the transparency of reporting. This both bolsters credibility for brands and supports hard-pressed management who are crying out for some analytics to boost decision-making and strategic planning.

If an organisation wants its people to make good and better choices, then it essentially needs to both empower and equip them accordingly, concludes Pierre-Emmanuel Tetaz:

Businesses must rely on their employees to adopt the right habits when it comes to sustainable travel. This can include anything from limiting travel to necessary trips to reduce the workers carbon footprint, to proposing more sustainable accommodation among the options for business travellers.

That said, businesses also need to understand what will incentivise employees to adopt greener practices, and not rely so heavily on corporate policy. In our survey, we found that Europeans see tools to assess the sustainability of travel and accommodation options, plus senior leadership setting an example, as the two most impactful awareness activities.

The good news coming out of the survey results is that the proportion of corporate travel decision-makers now favouring the use of tools has risen significantly since the last SAP Concur research in 2020 — jumping up 42%, to reach 63%, in 2022.

This groundswell of enthusiasm for tech-enabled rigour to underpin reporting holds the key to the corporate travel sector getting its sustainability ambitions back on track. In effect, robust sustainability data is the one luxury corporate travel cannot do without.

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