Beyond greenwashing

A preview of one of Phocuswright's Travel Innovation and Technology Trends 2023: Green Travel Innovation Now (Yes, Now!)

By Cathy Schetzina Walsh

Introduction

In the five decades since the first Earth Day highlighted the need for environmental protection, world tourism has exploded. Global air passengers in 2019 peaked at 4.56 billion, up from 310 million in 1970. Before the COVID-19 pandemic ground travel to a halt, many destinations were feeling the impact of overtourism and are doing so again as post-pandemic tourism comes back in force. Perhaps more pertinently, recent research indicates that transport accounts for approximately one fifth of all global carbon dioxide emissions.

As global tourism echoes the need to “build back better,” the industry is at a crossroads: The market can either take action to become more sustainable via innovation – or be forced to do so via crises and regulation.

Climate change is no longer a future hypothetical; it is happening now. The world’s governments, historically slow to respond to the climate crisis, are more and more compelled to take action, and travelers are increasingly focused on sustainability. While some travel players seem content to introduce a small initiative and consider the environmental action box checked, this approach is no longer sufficient. The industry’s future dictates that travel companies and stakeholders must meet the sustainability challenge with pragmatic, creative and innovative answers. This article provides an overview of recent developments in travel sustainability and highlights opportunities to deploy technology-driven solutions.

Beyond Greenwashing

For decades, the travel industry has pondered and promoted environmental initiatives. While generally well intentioned, many of these efforts had minimal impact – or were discontinued altogether amid limited traveler interest and high cost. But there is now growing pressure to move beyond greenwashing and enact real change.

Travelers – particularly younger travelers – increasingly consider environmental impact when making travel plans. Gen Z is eager to experience the world through travel – and Gen Z travelers are equally concerned about the impact climate chaos could have on their future. According to Booking.com’s 2022 sustainability survey of 30,000 travelers across 32 countries/territories, 81% of travelers indicate sustainable travel is important to them, and 71% planned to travel more sustainably over the next 12 months.

Phocuswright’s Sustainability in European Travel 2021 suggests roughly 30-40% of European travelers are willing to pay more for air travel powered by sustainable fuel, and roughly 25-35% are willing to pay for carbon offsets when flying.

Many travel companies recognize that travelers have a growing interest in more sustainable travel, but have serious concerns over travelers’ willingness to pay more for carbon neutrality or environmentally-friendly options. Phocuswright’s Sustainability in European Travel 2021 suggests roughly 30-40% of European travelers are willing to pay more for air travel powered by sustainable fuel, and roughly 25-35% are willing to pay for carbon offsets when flying. However, for travelers age 18-34, this share jumps significantly. For example, in the U.K., 55% of travelers age 18-34 are likely to pay to offset their carbon footprint when flying. This represents a growing share of consumers that are eager to act on sustainable travel.

However, travel companies must not rely on traveler sentiment alone to guide their sustainability investments. If data and algorithms can be employed so profitably to keep users glued to social media, travel companies can and must harness innovative, technology-driven processes to make environmentally-positive travel decisions both highly desirable and indivisible from the industry’s future success. Examples of such initiatives are included toward the end of this article.

Signs of Progress

While the tourism industry is generally not subject to binding agreements on sustainability, many travel companies have made public commitments to take action. The tourism industry has launched several initiatives committing to decarbonization. The Glasgow Declaration, launched at the UN Climate Change Conference in Glasgow (COP26) in November 2021, aligned tourism with the Paris Agreement, with over 700 business and government signatories committing to halve emissions by 2030 and reach net-zero emissions before 2050. The Toulouse Declaration, signed in February 2022 by the EU member states and 10 other European nations, supports the efforts of EU aviation to reach net zero by 2050.

Individual companies also are spearheading efforts to shift to renewable energy sources.

Significant Challenges Remain

While some within the travel industry have been working toward sustainability goals for a decade or more, others are just getting started. There are substantial challenges on the path to sustainability, including the need to balance short-term economic benefits with long-term social and environmental goals, overcoming reliance on mass tourism and lack of awareness/education.

Despite these challenges, there are opportunities to create impactful products and services now. The sustainable future will crown new winners and losers, and established travel companies and would-be startups alike should actively pursue innovation in this area.

A Snapshot of Sustainable Travel Initiatives

Sustainable travel encompasses a range of objectives, and a complete overview of supporting technologies and initiatives beyond the scope of this article. The discussion below highlights a handful of sustainability efforts within travel and tourism that illustrate progress and current approaches.

Carbon Offsets

Sustainable Aviation Fuel (SAF)

Sustainable Transportation

Sustainable Hospitality

Shopping and Booking

The Future Calls

Beyond the desire to make cleaner choices, sustainability is also good for business. A meta-analysis published by the NYU Stern Center for Sustainable Business showed that ESG (Environmental, Social and Governance) on balance has a positive impact on financial performance, particularly over the long term. According to the report, “sustainability initiatives at corporations appear to drive better financial performance due to mediating factors such as improved risk management and more innovation.” Whether motivated by the love of travel or profit, the tourism industry must accelerate sustainability action and innovation.

This article is part of a content series that explores some of the most impactful innovation and technology-driven trends that will influence the travel industry in 2023 and beyond.

Watch the online event that covered each trend, presented by Phocuswright analysts:

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