Microsoft’s New Carbon Penalties for Corporate Travel Stir Debate

Microsoft’s announcement this week that it was increasing the carbon emissions penalty it charges itself by nearly 600 percent was broadly welcomed. It’s long been in the sights of campaigners, including one called #justuseteams.

The technology company has pledged to invest the money in green projects, like buying more sustainable aviation fuel.

But the bigger problem no longer seems to be about how to cut carbon emissions, but rather how that gets counted. In Microsoft’s sustainability commitments blog update, called Building a foundation for 2030, it outlines it is redoubling its efforts on measurement, to help accelerate the maturation and adoption of industry standards for carbon accounting.

“The need for a more holistic focus on measurement goes beyond Microsoft. It was the impetus for the Carbon Call, a new initiative we announced with ClimateWorks Foundation and 20+ other leading organizations. Together we will focus on solving companies’ carbon emissions and removal accounting challenges for a net zero future,” it said.

One corporate travel expert said it was great Microsoft was focused on sustainable fuel, aiming to bring it into the travel program, but questioned the maths. Microsoft is charging itself a business travel fee of $100 per metric ton of carbon dioxide equivalent (or mtCO2e).

John Harvey, managing partner at consultancy Harvey & Heywood, decided to run the numbers.

“It will be interesting to learn how the $100 figure was arrived at and how Microsoft plans to close the gap between this and the actual cost of sustainable fuel required to remove its emissions — as one metric ton requires approximately 328kg of sustainable fuel to achieve this,” he said.

“Accepting that we have unprecedented fuel prices today, with fossil jet fuel at $1,118.96 $/mt average based on the Jet Fuel Monitor, and even if we use a low side example of say three times cost of sustainable fuel to fossil jet fuel, sustainable fuel could easily be over $3,000 per tonne. Therefore the Microsoft budget will buy just 10 percent of what’s needed.”

Meanwhile, another expert said these Scope 3 emissions, which includes business travel, were the most difficult to calculate, and that controlling and reducing them comes second as they heavily depend on knowing what, where, how and how much.

And most air travelers didn’t bother with carbon compensation simply because they are missing transparency and consistency in how their carbon footprint is calculated, according to Stefan Thiel, data analytics practice partner at Teradata. No surprise then that a recent study of a European airline found just 4.46 percent of bookings included an offset compensation from passengers.

“Results today are pre-calculated and based on default formulas, but have nothing to do with what actually happened. So not specific to actual seat load, fuel burn, route flown, or, most critically, contrails produced by the aircraft,” he said.

“While I acknowledge that it will take time to fully understand the whys, hows and whats, just as I hail Microsoft’s general approach, let’s improve the quality of data, analytics and insights that form the basis for the right decisions to avoid a public perception of actionism.”

Sidenotes

Kiel Lawrence knows only too well what happens when a company grows too fast, following a two-and-a-half year stint at WeWork — a period that coincided with its CEO, Adam Neumann, being ousted. Part of the problem was it opened up too many locations without factoring in the time to see returns.

Lawrence will be taking things more slowly at workspace startup Barnfox, which he’s just joined as head of development. But as it eyes more locations, the biggest challenge could be how it integrates with local communities, following a blistering attack and accusations of contributing to gentrification in New York State’s Hudson Valley.

Barnfox opened another location at 821 Broadway in Manhattan just last week, which will sit alongside three more rural locations in upstate New York. With this city address and a reported $1 million in new funding, Barnfox is certainly evolving the traditional co-working model, but the challenge will be balancing growth, which can really only come with enterprise customers, and ensuring that client base will be sensitive to rural regions.

Members Only

Barnfox has an atypical operating model, according to Lawrence. “I’ve been designing and building office space for the past 15 years. Barnfox is unique, they’re really factoring in that retreat aspect, rather than just coworking,” he said.

The business is intriguing, as it blends several themes. First, rather than focus on filling desk space in cities, Barnfox wants to develop a lifestyle brand by connecting members with rural destinations, which would then offer company retreats. It already counts fashion label Calvin Klein as one corporate customer, which used its Kingston location in the Hudson Valley, two hours from New York, for a team offsite.

Second, it appears to want to create a sense of exclusivity, rather than open its doors to anyone with a laptop. Like Soho House, which operates on a membership basis, Barnfox has 300 active members and 100 people on the waiting list, with prices starting from $185 a month for two days a week.

Finally, it runs a partnership program to team up with local hotels and Airbnb hosts, offering members special rates when they stay nearby — a tactic also used by Convene when it runs larger events.

The Question of Growth

Lawrence held senior director roles at WeWork, dealing with enterprise clients, and has had previous gigs at Jones Lang LaSalle  and Unispace. How can Barnfox scale up, but avoid the mistakes WeWork made?

“It’s not going to be a slow start, but it’s not going to be a rapid start. That’s why they brought me in, to scale this business as quickly and as effectively as possible,” said Lawrence. “A problem some coworking spaces have had is they sign leases too quickly, without doing their due diligence, and we’re going to do our best to avoid that, to find the right locations with the right landlord partners, and right assets.”

One industry insider told Skift that Barnfox’s business model is challenging because it is competing with free spaces, like hotels and cafes. “Their members can work for free at home or work for free at coffee shops, hotel lobbies, and other third spaces. This is why Breather was sold to Industrious for pennies,” they said.

However, Lawrence’s appointment makes sense to now draw in those larger enterprise clients.

But not everything is that harmonious in New York State’s greener pastures. As Skift has written, communities are no longer spectators in travel, and one media report suggested Barnfox’s Kingston presence was worsening “gentrification” in the area, pushing long-time residents out and raising the prices of transportation, food and housing.

“Readers are encouraged to take a moment to reflect on the amount of cocaine that will be done in the Barnfox bathrooms,” opined one blog in 2020.

Frederick Pikovsky, Barnfox CEO and co-founder, disagrees. “When we announced Barnfox Kingston opening in September of 2020, it was a stressful period of time during the pandemic. There were locals who were concerned about our intentions of taking advantage of an opportunity during a difficult time. Since then, we have completely flipped the sentiment. We have supported the local community by welcoming neighbors and non-profit organizations to donate our spaces for workshops, meetups, and events. We began communicating our values better,” he told Skift.

Barnfox has also fundraised and donated to the local food pantry and community cafes at its locations, and supports local makers and crafts by almost nearly exclusively selling locally made products, he added. “With some time to prove ourselves, we’ve become a welcomed and integrated member of the local communities in which we exist.”

The company is now looking at another site in New York City, and will explore leasing models and profit share agreements. “We’ll focus on the U.S. first, but given my global experience, there’s no reason we wouldn’t entertain global locations,” Lawrence said, adding  the ultimate goal was to bring in some nature and “get folks out of the urban environment.”

10-Second Corporate Travel Catch-Up

Who and what Skift has covered over the past week: Accor, Heathrow Airport, IHG, Inspirato, Microsoft, Mondee, Placemakr, Soho House, Sonder, Tripbam, Uber.

In Brief

SAP Concur Strikes New Carbon Counting Partnership  

Thrust Carbon has a new partnership with SAP Concur, to enable travel managers to offer live emissions reporting. Thrust Carbon will be available for both Concur Expense and Concur Travel, via the SAP Concur app center.  Customers will be able to generate on-demand reports for the business that can also be shared with government and industry bodies to highlight their progress towards net zero. 

Corporate Hotel Portal HRS Launches Crew Management Platform 

HRS has launched a new service called Crew & Passenger Solutions, designed to help airlines and rail carriers better manage travel for passengers and their own staff when disruptions occur. A virtual assistant travel companion app is offered, as well as access to digital cashless allowances provided in local currency, and instant communications on travel and work schedules. The new division was founded out of its existing crew product and complemented through an investment in Netherlands-based Stranded Flight Solutions, which helps airlines manage disruptions. Its solutions are already used by airlines including Lufthansa Group.

Gett and Rosecliff Call Off SPAC merger

Ground transport platform Gett and Rosecliff Acquisition Corp, a special purpose acquisition company (or SPAC), have terminated their $1 billion blank-check deal due to adverse market conditions. The decision was made based on volatility in the U.S. market spiked by geopolitical tensions and rate-hike concerns. As part of its merger review, Gett also said it will withdraw from the Russian transportation and delivery market permanently. The country represented a minority share of its business (less than 14 percent in direct gross profit in its fourth quarter). Meanwhile, Gett said bookings were growing and it was on track to reach profitability by the third quarter of 2022, a year earlier than planned.