A few decades ago, climate change and global warming became popular topics, warning humans to take action to protect the environment. Today, the fears those topics sparked are a reality. From floods, forest fires, and seasonal shifts to devastating health risks, the effects of global warming are being felt across the globe.
Tackling these issues has been one of the most important agendas of international institutions like the UN with multiple participating countries, such as the US and the European Union. Looking at the far and wide reaching effects of global warming, the UN’s “Who Cares Wins” report introduced the Environmental, Social, and Governance framework more commonly known as ESG.
On a smaller scale, businesses have been trying to adopt more sustainable practices to do their part and reduce carbon emissions. Reevaluating corporate travel is one of the strategies companies are using to do their part to battle back against climate change.
What is ESG?
ESG was first created to introduce environmental, social, and governance concerns into the financial market to encourage investments aimed at improving related issues. Fast-forward to today, the term is now integrated into organizations’ plans of action as the world moves towards building a better, greener, safer future for the coming generations.
ESG is a framework built by companies around the world to help their stakeholders understand how they contribute towards ensuring a sustainable future. The framework helps companies capture, record, and report all the non-financial risks and opportunities they face across their business processes.
While the social aspect talks about stakeholder safety and care, and the governance aspect covers the responsibility of the company towards stakeholders and society, the environmental aspect focuses on the company’s environmental impact. One of the most important components that helps measure this environmental impact are the company’s carbon emissions.
Understanding carbon emissions
Carbon emissions refer to the greenhouse gases released into the atmosphere during carbon combustion processes, such as the burning of fossil fuels. These greenhouse gases affect the planet’s temperature, ultimately leading to climate change. As human beings aim to reduce its detrimental effects, the first step is to control carbon emissions.
With this in mind, countries and organizations are now working towards achieving “net-zero” emissions. Net-zero basically means that the amount of greenhouse gases released into the atmosphere must be balanced and cancelled out by factors that help remove or neutralize their effects. While it is impossible to stop all activities that produce greenhouse gases, the world can come together and achieve net-zero emissions with the help of carbon-reducing activities if we try. Keeping this in mind, over the last decade, government regulations have been introduced by most countries as a result of fruitful discussions during major summits around the world to achieve this goal.
The EU has been the foremost region to have introduced strict laws and regulations in this regard, such as the Corporate Sustainability Reporting Directive (CSRD). Over the last few years, many other countries have introduced laws, regulations, directives, and incentives to encourage organizations to voluntarily or compulsorily adopt greener practices, such as the AB 2331 Californian Carbon Offset Bill 2024, SEC climate disclosure, The Task Force on Climate-Related Financial Disclosures (TCFD), The International Sustainability Standards Board (ISSB), and more.
Carbon emissions and business travel
As companies struggle to build accurate carbon emission reports as per relevant regulations, it becomes necessary for them to calculate the emissions for their purchases based on specified protocols such as the Greenhouse Gas Protocol (GHG Protocol).
The GHG Protocol categorizes all of a company’s sources of emissions into Scope 1, 2, and 3 emissions, within which business travel is classified as a Scope 3 emission. Similarly, the substantial emissions sourcing from business travel activities have been covered under multiple other regulations necessitating their tracking and reporting practices.
These practices emphasize the importance of accuracy in carbon emission calculation and reporting. To maintain the accuracy of calculations, they need to be based on the GHG Protocol and industry-specific requirements while also considering multiple criteria such as average product category emissions, location, value, use-case, and more.
How to track, report, and reduce carbon emissions in business travel
A business travel process starts when a travel request is raised by an employee. This travel request is where carbon emission tracking, reporting, and controlling is initiated. Whether companies enable self-booking options for employees or have centralized travel teams enabling bookings for all, companies must build policies to ensure bookings are finalized keeping carbon emission impact in mind.
Let’s look at some ways companies can reduce their carbon emissions from business travel.
Travel policies:
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Incentivize choosing flight options with the lowest carbon emissions, eco-friendly hotels, and more.
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Restrict employees from choosing options with the highest carbon emissions.
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Enforce employee-level business travel carbon emission limits.
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Capture and audit travel reasons to reduce unnecessary business travel.
Employee awareness:
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Run education and awareness programs for employees to highlight the environmental impact of business travel and the importance of individual contribution.
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Educate employees on the practices of “greenwashing” and how to avoid the same.
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Host quizzes and engaging activities to reiterate the importance of sustainable choices when traveling.
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Highlight the impact of using alternate travel options such as electric vehicles, hydrogen vehicles, and public transportation wherever possible.
Invest in solutions:
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Ensure environmental impact information is readily available to all employees at the time of booking and using the available services.
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Invest in solutions that help offset unavoidable carbon emissions through carbon removal.
Ensure measurement accuracy:
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Carbon emission calculation is complex because of multiple sources of information, double counting risks, and more.
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When preparing carbon emission accounting reports for regulatory requirements, such as the GHG Protocol’s Scope 3 emissions, data accuracy is a must.
Leverage technology, such as Lune, that ensures accurate business travel emissions calculation based on GHG protocols, considering industry-specific criteria like merchants, geographies, and more. It also takes into consideration industry-specific emission data made available by the UN through the ICAO carbon emission calculator for flights and the Global Logistics Emissions Council (GLEC) Framework, the formally recognized global standard for calculating GHG emissions from transport chains (including logistics and freight).
In summary
While managing the environmental impact of business travel seems challenging, enabling employees to make informed and ethical decisions in this regard goes a long way. With the Zoho Expense and Lune integration, you can empower employees with the right information at the right time and pave the way for a sustainable future. Try the integration here.
Want to learn more about where to start? Book a demo today with our specialist.