Will cutting emissions cut into corporate travel?: Phocuswright

Travel Innovation and Technology Trends 2024

Will cutting emissions cut into corporate travel?

This is a preview of the full report:
Green Dilemma How Cutting Emissions Cuts Into Corporate Travel

By Lorraine Sileo

Corporations have put their employees back on the road, and it’s just a matter of time before their travel spend catches up to 2019. But corporate travel looks very different today than it did four years ago. NDC and airline direct booking have put a strain on intermediaries, new players have taken center stage and technologies such as personalization and generative AI have raised the stakes for travel providers.

Another major change has been related to trip spend, including how much a corporation allocates to its air travel budget. Many large corporations have not spent anywhere near the percentage of revenue on travel that they have in the past.

One big impediment to the corporate travel recovery is sustainability. Most Fortune 1000 companies have been vocal about their commitment to cutting greenhouse gas (GHG) emissions and have cited pledges toward the Science-Based Targets (SBT) initiative and limiting Scope 3 emissions. Scope 3 emissions are generated from sources outside of the company, such as throughout its supply chain and from customers’ use of its products, and include carbon emissions from business travel.

A confluence of factors has emboldened these corporate sustainability measures. It is becoming more acceptable, even commendable, to consider other modes of transportation or classes of travel or to consolidate several trips into one, while some trips don’t have to happen at all. By replacing face-to-face meetings with video conferencing, many companies have shown they can accomplish their goals without missing a beat.

Cutting back on air miles is the easiest way for corporations to limit greenhouse gas emissions while also cutting costs by evaluating the necessity (and environmental impact) of each trip. Though not all sustainability actions lead to cost savings (e.g., flying direct and staying in “green” hotels can cost more), when combined they can lead to fewer trips overall.

Phocuswright's Green Dilemma: How Cutting Emissions Cuts Into Corporate Travel is part of the larger content series Travel Innovation and Technology Trends 2024

Check out the full content series

The full report covers:

In-depth data from company actions for reducing emissions
Actions taken to reduce number of trips and emissions
Public pressure vs. the law
Further examination of the impact of sustainability measures and its direct influence on travel spend
An analysis of sustainability reports from four large corporations
A look at the bottom line

What Do the Data Say?

U.S. air volume down

An analysis of U.S.-booked air sales data from BTN’s Corporate Travel 100 list of 75 top U.S. companies (where comparable data were available) found that volume was down by 45% in 2022 versus 2019. Many companies cited their pledges toward the SBT initiative and limiting Scope 3 emissions as their reasons for curtailing employee trips.

Deeps cuts in percentage of overall revenue spent on U.S. air

Another analysis of BTN data from eight financial services/tech/consulting companies such as JP Morgan and Accenture, found deeps cuts in the percentage of overall revenue spent on U.S. air travel in 2022 versus 2019.

Taking Initiative

Companies have undertaken several actions to achieve SBT goals, including offering employee incentives for choosing “green” transportation and lodging options. But air travel is the biggest target, and rightfully so. According to the EPA, greenhouse gas emissions from transportation account for about 29% of total U.S. GHG, making it the largest contributor.

When travel managers were asked what they have been tasked with in delivering or managing to meet carbon emissions reduction targets, 48% said overall travel reduction and 41% said traveler booking behavior modification.
Business Travel News Survey

Just How Serious Are They?

While it's clear that major global companies have reduced travel for sustainability’s sake, there's some concern these actions are performative, and aimed at shareholder or government appeasement. Just weeks after the SEC’s new requirements left out mandatory Scope 3 reporting, it seems some companies are pulling back on their initiatives.

The Financial Times reported that two of the world’s largest asset managers, JPMorgan and State Street Global Advisors, are quitting the Climate Action 100+ Coalition, while another, BlackRock, transferred its membership to a smaller subsidiary. And recently, an annual report by campaign group Transport & Environment said that 83% of global companies “are not taking the weight of their climate impact seriously” by failing to set ambitious emission reduction targets. If global companies renege on their net zero promises, will business travel get a boost? That remains to be seen.

Learn more about the full report here.

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 2024 and beyond.

Below is a link to each full trend analysis:

At a Crossroads: Underappreciated Tech in Travel

Who Owns the Customer? How About the Customer Themselves!

Green Dilemma: How Cutting Emissions Cuts Into Corporate Travel

From Buzzword to Bottom Line: Keeping Pace With Gen AI in Travel

True Automated AI in Travel Is Coming

CBDCs are Coming: Is the Travel Industry (and the World) Ready?

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