Corporate Travel Is a Lightning Rod In Carbon Offsets Debate

Travel and sustainability will be major talking points over the next couple of weeks ahead of a major climate change conference, but there are concerns corporations are using carbon offsetting as a cover to avoid taking real action to reduce emissions.

The 26th UN Climate Change Conference of the Parties, or COP26, takes place in Glasgow from October 31 to November 12, and corporate marketing departments are in overdrive. However, with companies increasingly uttering terms like carbon neutral, carbon negative and net zero, one sustainability startup warned there’s growing confusion about what these words actually mean.

“There has been a trend of top-down, corporate declarations of net zero targets in recent years and some of these have certainly been made as political gestures, without first considering the realities and how such a target can be achieved,” said Tom Wood, carbon accounting lead at Emitwise.

Corporate travel is in the spotlight. “The sustainability thinking is that we want to reduce business class because it’s less efficient in transporting people,” said Neil Hammond, partner at GoldSpring Consulting, speaking at a recent webinar. “We could fill up more of the plane with more economy seats, that’s a longer term play. Unfortunately, I’m not sure how successful that’s going to be. That’s against the traveler experience focus.”

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At the same time, some analysts believe business trips will rebound over the coming months. They’ve lagged the leisure recovery, but with news of the U.S. reopening its borders to vaccinated air travelers on November 8, employees are getting ready to fly again.

No So Fast

Larger organizations’ sustainability drives could tone down much of the pent-up demand, much to the disappointment of airlines. Business travel is a common emissions category that companies seek to calculate. It is commonly the first of the so-called Scope 3 (indirect) emissions sources, which companies calculate after coming to grips with direct emissions. These include Scope 1 (consuming fuel in vehicles or heating systems owned by the company) and Scope 2 (purchased energy emissions.)

Witness too the range of global consultancies planning to slash these Scope 3 emissions as early as next year.

The issue, however, is some companies decide to offset their emissions in a bid to become buzzword-friendly carbon neutral — it sounds great, but is it enough? And becoming a carbon neutral company isn’t the same as becoming a net zero company, either, although the terms can get mixed up in corporate speak.

“The market for carbon offsets is buoyant with cheap ‘avoidance’ offsets where you pay for the avoidance of emissions which it is claimed would otherwise have taken place,” Wood said. “These can be controversial and of variable quality — as it can be difficult to prove that the emission would have occurred in the absence of the scheme.”

Some hospitality companies now also use “carbon negative.” Radisson Hotel Group has claimed it is the world’s first hotel group to offer carbon negative meetings across 400 participating hotels, as part of its “Carbon Negative Planet Positive” initiative.

“The upcoming COP26 conference will see world leaders come together to discuss climate change which needs all our attention,” said Eric de Neef, Radisson’s executive vice president, global chief branding and commercial officer.  “We are constantly reviewing how we as a global business can influence positive climate action, and how we can encourage the hospitality industry to push the boundaries on green meetings and events.”

The emerging definition of net zero requires companies first undertake deep reductions in carbon emissions before offsetting the remaining residual emissions with “removal” offsets. These include funding tree planting and technologies such as carbon capture and storage, which genuinely remove carbon from the atmosphere.

Microsoft, for example, has set up a $1 billion fund to invest in carbon reduction and removal technologies. It aims to be carbon negative by 2030. The British government also recently announced it had attracted $13 billion from global investors to fund its green regeneration agenda, which includes zero carbon warehouses and decarbonisation technology for the waste industry.

What Can We Expect to See?

Shorter term, the best option a company can take is to consider what business travel can reasonably be avoided, but this rarely means stopping traveling at all. As well as moving to economy flights, there’s the obvious shift from air or road to trains.

Emitwise isn’t seeing much demand for carbon budgets, Wood said, as they represent a hard limit on what could be an essential business activity. But internal carbon pricing is growing, where a company charges teams an additional cost for activities that result in carbon emissions, on top of the costs in the external market. For example, this might involve adding $20 or $100 to the cost of a short-haul return flight, but the money is retained within the business. But again, it doesn’t prevent the trips from taking place.

Sustainable aviation fuel is another option. “Solutions such as sustainable fuel and newer more efficient aircraft are essential. Corporate clients are purchasing it directly from producers, while the Airbus A321 neo delivers 20 percent greater efficiency,” said John Harvey, managing partner at consultancy Harvey & Heywood.

And airlines are committing to these fuels. Southwest Airlines, for example, recently pledged to replace 10 percent of its total jet fuel consumption with sustainable aviation fuel by 2030.

Online booking tools are also starting to put aircraft type information in front of the traveler now, said GoldSpring’s Hammond. “This Covid experience we’ve gone through has been a great opportunity for the airlines to refresh their fleets, and retire old aircraft,” he said. Travel managers were also evaluating suppliers, which are now automatically reporting their initiatives and different scope levels to them, including carbon offsetting and even their own carbon neutral date.

It’s all progress, but there’s a long way to go. November’s COP26 is at least expected to offer definitive guidance around the vocabulary and terminology — and lead to more thought before declaring net zero targets.

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