Less is more

Global business travel spending isn’t expected to rebound to pre-pandemic levels until 2026, according to the latest forecast from the Global Business Travel Association, which had initially predicted full recovery by 2024.

While some of the reasons for the downgraded forecast are all too familiar – lingering health concerns about Covid-19, rising travel costs, increased utilisation of virtual meeting technologies – there’s a wild card whose impact on overall business travel trends remains unclear: sustainability.

To keep global warming to no more than 1.5 degrees Celsius, as called for in the Paris Agreement which was adopted in 2015, global carbon emissions need to be reduced by 45 per cent by 2030 and reach net zero by 2050, according to the United Nations.

“As long as we continue to travel as much as we did in the past, we will not be able to do that,” says Horst Bayer, founder of TravelHorst Sustainable Business Travel Consulting.

The vast majority of business travel emissions stem from air travel, Bayer noted, while other forms of transport, as well as hotels, also contribute greenhouse gases. The most effective way to mitigate emissions is to reconsider travelling at all.

“We can use technology to reduce emissions, but we can’t do it fast enough,” says Bayer. “People really need to talk about avoidance, especially of air travel.”

Current thinking

Three in ten companies expect sustainability alone to result in an eleven to 25 per cent reduction in travel budgets by 2025, according to the April 2022 Reshaping the Landscape: Corporate Travel in 2022 and Beyond report from Deloitte’s Transportation, Hospitality & Services practice. “Sustainability, still a priority, will push against future corporate travel spend,” Deloitte researchers wrote.

Meanwhile, the 2022 State of Sustainability in the Global Business Travel Sector report from GBTA found that 60 per cent of industry representatives surveyed support reducing the frequency of business travel in order to cut emissions.

Things may look a little different when it comes to making sweeping travel reductions in an individual company. For example, energy-intensive companies, like manufacturing or mining firms, or tech companies running huge server farms, may put business travel emissions on the back burner, because it only represents a tiny fraction of the company’s overall footprint. On the other hand some firms record business travel as the single largest source of carbon emissions, thus driving more immediate mitigation.

Consulting companies are a case in point. PwC, for one, is targeting a 40 per cent reduction in carbon emissions by 2022 through a combination of replacing travel with virtual meetings and encouraging the use of internal systems to book travel, where senior managers must justify the case for travel.

The company said such internal scrutiny was a contributing factor in reducing PwC’s emissions from non-client related air travel by 90 per cent between 2007 and 2017.

Surgical procedures

Bayer implies PwC has the right idea, and adds that specific scrutiny around individual trip emissions would be the next step. “We need reason codes to explain why business travel is necessary,” he says. “In the approval process, if there are too many CO₂ emissions, then you can’t travel.” Such reductions, when they come, are likely to be more surgical than sweeping.

“Climate change is a top priority for organisations worldwide,” says BCG Consulting global head of travel Gehan Colliander. The firm has been a certified carbon-neutral company since 2018 and in 2020 committed to reaching net zero climate impact by 2030. “However, this will not necessarily mean uniquely reducing the volume of business travel, but [rather a] transition to less carbon-intensive modes of travel [and identifying] additional emissions reductions levers, including the use of sustainable aviation fuels, purchasing independently verified carbon credits, etc.”

Target air travel

BCG has revamped its online travel booking tool to promote more sustainable decisions, including prioritising train travel over flights on certain routes.

Some European companies now prohibit air travel in favour of train travel for trips under 500km (310 miles): the carbon footprint of a Eurostar train is just 6 grams of carbon dioxide equivalents per passenger kilometre, compared to 255 grams for a domestic airline flight, according to calculations from the UK Department for Business, Energy & Industrial Strategy.

Colliander cites a number of “less intensive” options including electric and hybrid vehicles that have got more play in the BCG programme.

Influence decision-making

Microsoft uses a self-imposed carbon tax as a lever to discourage unnecessary business travel. Initially set at $15 per metric ton of carbon dioxide equivalent, the tax was raised to $100 as of July 2022. That’s significantly higher than trying to assess the true cost of carbon to a trip, which would add an inconsequential cost that could be easily ignored by travel managers, according to Scott Gillespie, founder and CEO of tClara. “You make the trip significantly more expensive by adding a carbon tax,” says Gillespie. “It can force managers to think more carefully about trips as their cost goes up.”

Fewer but longer trips

One travel-reduction strategy that’s already being adopted by some companies is that of eschewing one- or two-night business trips in favour of longer trips that build in multiple client visits, which helps reduce the intensity of business travel. “Defining a next-generation way of travelling is key to meeting sustainability goals, and the extended-stay approach supports achieving that,” says Colliander.

Client data from hotel programme solutions provider HRS shows that accommodation stays are now 40 per cent longer after the pandemic than they were prior to it, an indication that companies recognise hotel stays are less emissions intensive than initiating another roundtrip.

Meetings at your fingertips

Technology also plays a powerful role in both reducing corporate travel as part of a sustainability strategy and deciding how to meet travel-reduction goals. Zoom, Skype, Microsoft Teams and other videoconferencing tools were essential in maintaining client and interoffice communications when Covid-19 shut down travel and offices, and experts expect virtual meetings to permanently replace at least some meetings that previously would have taken place face-to-face.

Gillespie calls it “low-value” business trips, and Colliander agrees it’s an X-factor that companies had a hard time addressing prior to the pandemic. “My estimate… is that 10 to 15 per cent of total of forecasted travel could be replaced by virtual solutions,” she says, with a few caveats that would apply to industry sector and company needs.

Guided by metrics

Colliander said BCG has assessed all work elements that can remain virtual going forward, reintroducing travel only when it is “key to client value creation and our employee value proposition.” The key element in making those decisions, however, is metrics.

“To include business travel in a sustainability strategy, one must understand the impact of travel on the organisation’s footprint,” adds Colliander.

“Then the organisation needs to align around redefining normal, forging new paths, and introducing the notion of ‘meaningful travel.’ This starts by implementing a process of measuring, reducing, and mitigating.”

Gillespie says travel managers can utilise tools like tClara’s TripTester to assess the justification for business trips. Sustainable travel choices are one of five metrics used by TripTester, which also scores meetings based on their importance, results, possible payback, and wellbeing impact on the traveller – with customised weighting for each decision-making vector.

Which brings up an interesting point: sustainable travel can have a number of meanings, not limited to carbon emissions. As companies reconfigure travel programmes with sustainability in mind, they might do well to understand the role of employee wellbeing – and how travel fits into the picture, says Bayer.

Some employees may be itching to get back on the road after two-plus years of Covid-19 related restrictions, but it wasn’t that long ago that the hot topic of conversation was the impact of excessive business travel on quality of life.

“It’s equally important to take care of people as planet,” says Bayer, who argues that the pillars of any corporate sustainability strategy should be both social and environmental.