It’s no secret that the past few years have been difficult for the travel industry. Since travel volumes began accelerating post-pandemic, rising inflation and increased interest rates have made it difficult for many businesses to maintain profitability. At the same time, industry leaders must be prepared for new sustainability targets which are intrinsically linked to shifting financial demands in this fresh landscape.
In the year ahead, governments will introduce and update sustainability policies and regulations – such as the Corporate Sustainability Reporting Directive (CSRD) – as the EU pursues its net zero carbon by 2050 strategy. According to research from Amadeus, costs are the largest challenge for meeting environmental
commitments for sustainability leaders, cited by 40 per cent as their
biggest barrier. Just under half said they will be investing more on sustainability in 2024 compared with last year.
However, it’s not always clear where to start, especially in hard-to-decarbonise sectors like travel and logistics. Across industries, despite stating big climate goals, many companies are still unsure about how to achieve them.
Balancing commercial concerns
It’s a constant juggling act, attempting to engage senior stakeholders while navigating sustainability regulations, reporting, and data management on the one hand, and commercial projects on the other.
Asking C-suite executives to engage in more sustainable practices that hinder profits is futile. As such, within companies, there is often a struggle over which projects win roadmap priority. If a climate-focused project has no commercial impact, it usually won’t become a business priority, resulting in a binary split between the two.
That’s why, to make companies future-proof, efforts must be refocused. To make climate-conscious initiatives a more compelling investment from a company perspective, responsible sustainability and business managers must build a bridge between the financial bottom line and sustainability.
They must demonstrate how sustainable practices contribute to a company’s longer-term business resilience, which requires getting the right processes in place. To get started, companies should:
1. Define clear CO2 objectives with a short-term impact – longer-term results should also be prioritised but alongside near-term outcomes;
2. Select economic KPIs (such as cost savings and ROI) that are derived from climate action – for example, CO2 emissions reductions under CO2 policies, or reallocation from companies to customers;
3. Integrate sustainability projects into core business strategy – get other departments and leadership figures (such as business unit heads, finance and business development teams) to commit to and contribute to the above;
4. Point to industry examples of success – more on that below.
Making sustainable efforts pay
One example of this in the aviation industry is choosing sustainable fuels that reduce Emission Trading System (ETS) costs. The ETS is a cap and trade system that sets a maximum on the total amount of certain greenhouse gases that installations covered by the system can emit. By reducing emissions through sustainable fuel choices, a company needs to buy fewer credits – saving money in the long run. From corporate deals to Sustainable Aviation Fuel (SAF) fares, or integration of SAF by default, there’s a wide range of ways for airlines to take action.
Elsewhere, with travel and logistics firms, there are book and claim systems that allow companies to prove and distribute carbon reductions among their customers. Integrating these into their offering is not only making carbon reductions auditable for all players involved, but through a clear allocation it helps to increase interest and investments from customers – and ultimately serving the customers’ CSRD requirements or other climate commitments.
The cost of climate carelessness
As well as cost savings, benefits to look for and highlight include risk management and customer loyalty, which are expensive areas in which to make mistakes. Regulatory compliance becomes more and more part of financial strategies, so investing preemptively in sustainability allows businesses to stay ahead of potential penalties and capitalise on incentives for early adoption of climate-conscious initiatives.
That’s why profit can’t be separated from climate targets. Summing it up, there are real incentives for companies to dive into sustainability, yet it is on the sustainability managers of this world to find the right angle to get it started. As sustainability doesn’t need to be purely altruistic for companies, there is a win-win situation for many ahead: boosting sustainability while improving company performance.