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Large companies listed on the stock market have for some time now been required to report on the sustainability impact of their corporate travel. But in Europe such requirements are going to be extended to companies with as few as 500 staff with the introduction of the EU Corporate Sustainability Reporting Directive (CSRD) in January 2024.
This means that approximately 11,500 ‘public-interest’ companies across the EU will have to start applying the new rules related to monitoring travel during 2024 in order to be able to report on them publicly during the following year.
But what does the roll-out of the CSRD really mean for the European travel industry? Is this just something that affects suppliers of travel or will there be an impact for those selling, and indeed even buying, travel? Is this of concern just to corporate travel or could there be implications for the leisure space too? And is the industry ready? We asked a range of travel technology experts what they thought.
Andres Fabris, Founder & CEO from Traxo, a company specialising in location awareness for business travel, spots a challenge for companies whose employees make travel bookings outside of the official system. “The CSRD highlights another challenge for companies that don’t have adequate travel management programmes in place. Companies will need to report on scope 3 emissions as part of the directive, which includes their business travel. But they can only report on business travel that they can monitor and are aware of; in other words, they won’t be able to capture bookings made outside of the system. Companies need a really robust travel management programme, and a booking system that offers choice, convenience and control for their travellers. Otherwise, they risk inaccurate or incomplete CSRD reporting.”
Whilst this appears to be just an issue for corporate travel, it might not be that simple. Emilie Dumont, managing director of Digitrips (which is owns French multi-product travel platform MisterFly), spots an issue with the ever-blurring lines between business and leisure travel. “The evolving ‘bleisure’ trend could make sustainability reporting difficult. How does a company determine which parts of an employee’s trip was for work and which were for leisure? An employee might take a long-haul trip through their company, but might tag on a holiday and, as a result, book one less leisure flight than they otherwise would have. It’s going to be a logistical challenge, and companies need to develop strategies and calculations that take this into account. This could open up a whole new sales market though, or at least provide opportunities for tech providers to develop tools to respond to this need, which could be exciting.”
CSRD is also likely to impact the travel M&A market, as well as funding rounds, according to Morgann Lesne from travel investment bank Cambon Partners. He sees a change in due diligence after the CSRD’s introduction: “Companies looking for funding or considering a merger will need to get their ESG reporting in order or face rejection. It’s best to start preparing for that now rather than finding out at the last minute that this is a deal-breaker as data-collection and compliance takes much longer to do than any time-frame for an equity event. Start collecting ESG data and get familiar with the many different data points you’ll need to provide under the directive, there are many companies that can help with this.”
Travel trade insurers will be also looking for compliance with CSRD before issuing policies, says Sami Doyle from TMU Management, the data-driven insurance intermediary that safeguards the travel value chain for travel companies. “ESG scores measure a company’s exposure to long-term environmental, social and governance risks, and drive performance; therefore, they are a big consideration for insurers now during the underwriting process – your approach to these says a lot about your business.” He points out that travel has a huge challenge on its hands when it comes to meeting long-term net-zero goals, therefore is likely to be an industry under increased scrutiny from insurers, both those in the corporate travel and leisure space. “Insurers will be looking for proof of compliance with directives like the CSRD at a minimum; any gaps are likely to flag as a risk, not least because you could be fined or sued.”
Perhaps the most exciting impact with regards to CSRD however is that hotels will focus on sustainable profitability which will lead to the end of greenwashing. “Although it might sound tedious, this reporting directive could be really useful for hotels looking to find more profits using sustainable solutions that are actually profitable and that also tackle genuine ESG initiatives to their customers, particularly corporate travellers,” comments Chief Marketing & Innovation offices Alex Barros at leading hotel revenue management platform BEONx. “Hotels that are more advanced in the sustainability stakes will have access to more data, which can also be used to prove their commitment and transformation, will be able to measure and really search for solutions that are sustainable but more importantly profitable– something that would be great for sales & marketing if communicated appropriately. Eco-conscious travellers particularly dislike greenwashing, and the only way for a hotel business or any business for that matter to welcome green initiatives is if these initiatives deliver a positive financial impact and CSRD could help hotels to focus on that , getting hotels to really focus to be able to make this power move of sustainable profitability.”
