Mandatory carbon emissions reporting has either been introduced or soon will be in major travel markets around the world. As from next year, the European Union expects larger travel and tourism companies operating within the bloc to begin gathering data on greenhouse gas emissions.
Spearheaded by its new Corporate Sustainability Reporting Directive (CSRD) some 50,000 companies may be subject to mandatory emissions reporting, according to KPMG. That includes non-EU companies with subsidiaries operating in the Union or those listed on EU-regulated markets, the consultancy adds in its briefing, ‘Get ready for the next wave of ESG reporting’.
The new EU regime also requires companies to submit annual transition plans for reducing emissions, in compliance with the 2015 Paris Climate Accord to reduce the risks and impacts of climate change by keeping temperature increases below 2 degrees and preferably 1.5 degrees Celsius.
New mandatory reporting rules have also been imposed in the likes of Australia, Canada, India, and the UK. The World Travel and Tourism Council (WTTC) reports that US authorities are also preparing to adopt similar requirements that would make formerly voluntary emissions disclosures mandatory for US-registered companies.
In another development, the International Sustainability Standards Board has recently released what the WTTC says “will eventually become the international norm for sustainability accounting”. All the new standards require disclosure of Scope 1, 2, and 3 emissions under the Greenhouse Gas Protocol for corporate accounting.
Given the deluge of new mandatory standards, it’s time for travel and tourism to assess how prepared the sector is.WTTC
1. Heavy footprints in the sand
The vast majority of this carbon footprint is emitted by high-income countries, with US travellers topping the list. “As the number of people who can afford to travel grows, so will tourism’s environmental footprint,” the website adds in a briefing on how travel is contributing to the climate emergency.
Together with Oliver Wyman, the WTTC has conducted a sector-wide survey and plans to report the findings next quarter. The researchers’ advanced conclusion is that travel and tourism companies are struggling to get ahead of this. “While many of the sector’s biggest companies have set 2050 emission-reduction targets, just as many have just started to consider how to address climate change in their business,” they note, and this affects their understanding of and readiness for the upcoming reporting requirements.
The fact that travel and tourism is a diverse sector and often spans multiple countries and enterprises – both large and small – compounds the difficulties many operators will face in meeting these new rules.
2. Sector collaboration?
Lack of resources and expertise to tackle the demands of the new regulations were cited by many in the sector as big issues. Compliance reporting is a specialist skillset beyond a mere accounting and data-gathering exercise, the researchers note. It is going to take an organisation-wide shift in culture, and sustainability teams will need support and training.
Assembling data, especially Scope 3 emissions, from up- and downstream suppliers and partners in a dispersed value chain is also a complex task. Companies are already struggling to reconcile the investment needed in new data-collection capabilities with those being made in initiatives to reduce emissions and meet other ESG goals.
“Some form of sector collaboration may be needed for the first few years,” notes the WTTC. It hopes the upcoming report will help to fill the knowledge gaps and guide operators in the right direction.