Knowledge
Sustainable travel and the say-do gap
Delving into the psychology and research about one of the gaps to bridge to acceleraste the sustainable transformation of travel.
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Acting upon our emissions starts with understanding where and how they are coming from to identify areas of leverage to reduce and avoid them as much as possible, or when to choose compensation in the short term for remaining or hard-to-abate emissions. The private sector is getting ready for new emissions reporting regulations, and many companies are even ahead of the game and have started to allocate carbon budgets for their employees’ business travel.
After discussing travel companie’s need for carbon compensation and how to build a climate portfolio, this article aims to investigate how companies selling travel related products can build their carbon intelligence solutions. Similar to other business decisions like building a CRM or an HRM system, integrating carbon calculations is often a matter of “make-or-buy”. This article explores how carbon intelligence works and provides elements to decide whether to outsource or not.
The data required as input for carbon calculations can be either primary or secondary. Primary data is the data a company directly tracks from its operations. Though it seems pretty straight forward in theory, it is sometimes not possible to retrieve this information or the company might just not be able to trace it. In this case, secondary data are used, based on high volumes of historical observations provided by a third party.
In the case of emissions related to a travel product, the data is often based on a simulation prior to the activity (e.g. at check-out stage for a hotel booking flow). Indeed, for end customer’s to let their decision-making being influenced by some emission awareness, it must be disclosed during their purchasing journey at the stage where the purchasing decision takes place. And, as companies work hard to create a trust-based relationship with their clients, they must be sure to be in a position to disclose and explain what type of data the emission calculations are based on.
Every company has to start with these considerations: what data can I generate? what data do I need? what data does my client need to access to make more sustainable decisions? This cannot be done by a third party and is key for the next steps as it influences for instance the type of carbon calculation framework to chose and apply.
While it may be obvious that calculation methodologies differ across travel-related activities: a night stay, a taxi ride, a flight ticket, … there is also a lack of global governance and regulation that would enforce one single way to compute emissions for each. In the absence of such alignment, we saw the rise of numerous methodologies and frameworks. Take aviation for example, calculations can be made according to the GHG protocol, ICAO, IATA, GLEC, or any other country- or region-specific frameworks as well as frameworks developed by private companies. And this is only to quote the most widly spread and adopted. Each framework does have its strengths, area of excellence or regional relevance sometimes. But for companies willing to calculate their emissions or help raise their client’s awareness, deciding which methodology is the most appropriate can be very confusing and hard to decide.
Any company can find the above skills either by hiring a seasoned ESG reporting specialist (a scarce and highly demanded human resource at the moment) or by partnering with a third party whose core is to stay on top of the frameworks and carbon intelligence conversation. Navigating through the jungle of calculation frameworks can be a time-intensive task. Let alone keeping up with the pace at which they evolve. It also requires a good understanding of the nature of a business’s emissions to choose the methodology that will allow it to provide calculations as close to reality as possible given the nature of the data available.
The results of any carbon calculation is rarely meant to exist standalone but are mostly meant to be added to some internal reporting, or, in our case, displayed to an end-customer at some point in their purchasing path. While this is all happening digitally, emission calculations must then fit in the online user experience without disrupting it. This is mostly done through the API technology (Application Programming Interface), a simple plug-in solution that acts as an add-on to an already existing flow. An API should be able to perform calculations in real-time without slowing down loading times for a smooth UX. Indeed, a longer page load time increases the chance of customers leaving the booking process before ending the transaction.
Building and then integrating an API requires two very different sets of skills. Depending on the technological expertise of a company, IT departments might be able to integrate an API into the booking flow, though most of the time, developments skills for the initial built can lack. From planning over integration to testing, and bug bashing, building an in-house solution can be quite time (and resource) consuming. The risk being to see a longer than expected time-to-market, and seeing demand switching to alternative offering.
With the upcoming enforcement of the Corporate Sustainability Reporting Directive (CSRD), many companies will be required to publish an annual ESG report from 2023 onwards. Such process must be automated and often takes the format of automated dashboards.
Setting up the reporting infrastructure should be made a priority at last 12 months before a company starts reporting to be sure to perform tests and capture enough historical data prior to issuing a first report
As emission awareness is most often the first step toward reducing the impact of an activity, and while some supply chains still need some time to evolve towards sustainable operations, we observe that carbon calculations often link with some compensation in the short term. Indeed, most companies are participating in the voluntary carbon market (VCM) to bridge the carbon-neutral gap to channel financial efforts towards the travel industry’s sustainable disruption (e.g. to support the acceleration of Sustainable Aviation Fuel industrialisation...) The mechanism of the VCM is quite fragmented. Rather than just a one-time payment, compensation is a multi-step process: companies have to educate themselves on the supply types of climate projects and certifications, reach out to project developers, research projects that are also willing to sell to individual companies, educate themselves on carbon credit management, acquisition, accounting, and retirement, and finally issue certificates for end-customers.
Building the ideal climate projects portfolio comes with the trade-off between complexity in managing many supplier relationships and dependency on having only a few suppliers in the portfolio. Economies of scale play a role in pricing as well. In particular small scope — large impact projects happen under a lot of uncertainty. High-volume purchases are favoured by project developers as they provide higher planning security for project developers. This, in return, impacts prices and bargaining power.
As a vast majority of the private sector has embarked on their decarbonisation journey, we observe that emission calculations are mostly done in partnership with a third party. There are many options available.
Criteria for carbon intelligence partner benchmark:
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If partnering with a third party is the way to go for you, please reach out to access SQUAKE team’s extensive expertise in a simpe API-integration.
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