Running a travel company may soon become a little more complex, with the industry facing a “carbon squeeze” from new legislation designed to satisfy growing consumer expectations of transparency and action on climate change.
Despite Brexit, some operators selling into Europe must comply with new EU directives or just follow the trend towards greater transparency, with a few beginning to publish the carbon footprint of a package – albeit mostly without the air travel impact.
The UK industry may have been slow off the mark here. Consultancy TerraVerde Sustainability analysed the websites of the top 50 Atol holders and found more than 40% failed to mention sustainability at all, while only 30% had published sustainability plans. Because it hasn’t been a legal requirement, most haven’t bothered, but that is changing.
Introduced in January, the EU’s Corporate Sustainability Reporting Directive (CSRD) brings more detailed reporting requirements. It means large enterprises doing business in the EU – including those based outside it if they generate more than €150 million in the union – now need to disclose emissions starting this year, including Scope 3 “value chain” emissions.
For operators, Scope 3 could include a hotel’s carbon footprint, transfers and food. Reporting must be detailed in their 2025 results.
Most UK companies fall outside the scope of the CSRD, but the UK is planning its own version – the Sustainability Disclosure Standards (SDS). Again, it is thought only larger businesses will initially fall within it, with recommendations due in July. The Department for Business and Trade has indicated these will likely follow the EU’s lead.
“UK endorsed standards will only divert from the global baseline if absolutely necessary for UK specific matters,” it said.
’General direction of travel’
Intrepid Travel chief James Thornton recently indicated how Brussels was shaping thinking. “We’re now moving into a world led by European legislation,” he told TTG. “Within five years, carbon emissions will have to be reported in a similar way to financials, so we’re trying to get ahead of that curve.”
TerraVerde says: “By 2030, every business will be within the scope of the CSRD, including SMEs, and fines for non-compliance will be up to 5% of global turnover.” It added comparable legislation is planned in the US and some Asian nations.
The CSRD is different from yet another EU acronym, the CSDDD, or Corporate Sustainability Due Diligence Directive – a company toolkit covering environmental and social responsibility. The CSDDD was approved in March, pending ratification by the European Parliament.
“It is a similar concept to legislation which already exists in Germany – the Supply Chain Act,” said an Abta spokesperson. “The aim is to require large companies and companies in high-impact sectors to identify and, where necessary, prevent, end or mitigate adverse impacts of their activities on human rights and on the environment.”
Abta said CSDDD will only apply to UK businesses selling to European customers, such as OTAs. A spokes- person said: “In terms of CSDDD, it is still subject to approval, so things may change. The most we can say right now is that it will apply directly to UK businesses of a certain size that sell into Europe or to consumers in Europe.
“If you aren’t selling in Europe, there won’t be a direct requirement, but there may be a knock-on effect for UK businesses dealing with European companies given they need to comply with the rules.”
The spokesperson also stressed developments like CSDDD were indicative of “the general direction of travel” in terms of the sustainability reporting requirements being laid down by governments, which indicates a desire for businesses to look beyond carbon and environmental issues and to report on social issues as well.
Increased accountability?
Carbon accounting specialist Normative outlines the shift in thinking. “The proposed legislation gives directors specific obligations to integrate due diligence into corporate strategy and to take into account the human rights, climate change, and environmental consequences of their decisions,” it said.
In addition, large companies will also be compelled to align their business strategies with the Paris Agreement goal of limiting global warming to 1.5°C, meaning they must have a plan for reaching net-zero.
Big UK companies already have experience of this; since 2019, publicly listed companies and Limited Liability Partnerships (LLPs) have been required to report emissions under the UK’s Streamlined Energy and Carbon Reporting (SECR) policy.
To many consumers, this is all jargon and small print, but what is starting to imbue minds is the carbon impact of their own travels.
Explore, Intrepid and flight-free travel specialist Byway now add “carbon labels” to their trips measuring the carbon cost of the journey, the hotel, transfers, activities and meals. Emissions from the operators’ HQs, websites, brochure production, local operational offices, plus the carbon cost of using a local guide, are also counted.
Intrepid includes carbon labelling and offsetting for more than 500 itineraries. It calculates its 10-day Botswana Adventure trip generates almost 39kg of CO2 per day without flights. By way of comparison, it estimates a petrol car produces 100kg of CO2 for every 250 miles driven.
An Intrepid spokesperson explained: “We developed carbon labels to make it easier for customers to understand the impact of their holiday and make better-informed decisions on what trip they want to book. It also allows us to see which parts of our itineraries are creating the biggest environmental impact and retool them to dial back the carbon.”
Demand management?
Operators are the latest to feel the carbon squeeze, with airlines bearing the brunt of the focus until now, although carriers will remain under the spotlight for decades after the government, in April, reiterated its sustainable aviation fuel (SAF) mandate, which will require SAF to comprise 2% of UK jet fuel by 2025, 10% by 2030 and 22% by 2040.
The 10% ambition for 2030 is higher than the EU’s 6%, but parliament has said if emission savings cannot be delivered, “the government may have to reconsider demand management measures”.
It is still a small minority of consumers who welcome travel restrictions by way of enforced demand management such as carbon levies. Hopefully, compliance and transparency from the industry, combined with new legislation, will keep it that way.
