Corps. Hit The Gas On Travel Emissions Reporting

Any emerging practice naturally starts off in the minority. About six in seven organizations responding to Procurement.travel's "State Of The Practice" survey of mostly U.S. firms are not measuring greenhouse gas emissions from business travel. That includes four of every five companies that spend more than $5 million on travel and entertainment expenses.

Moreover, 72 percent of the polled travel decision-makers who said their organizations were not measuring the pollutants also said they had no plans to do so in the next couple years. That included 63 percent of companies spending more than $5 million on T&E and 61 percent of those spending more than $60 million.

But trends suggest this will change, maybe quickly.

Among firms of all sizes that do track emissions, 91 percent started doing so only within the past three years, including 61 percent within 12 months. The determination that roughly one in five larger firms was measuring business travel emissions corresponds to the Carbon Disclosure Project's 2008 results, which showed that 23 percent of 321 Standard & Poor's 500 firms report emissions generated by employee travel. ( 1) The figure doubled from 11 percent of 282 S&P 500 respondents the previous year. ( 2)

Backed by 385 institutional investors managing more than $57 trillion in assets, the CDP is the largest investor coalition in the world. It collects and analyzes annual responses from the world's largest corporations "on greenhouse gas emissions, the potential risks and opportunities climate change presents and strategies for managing those risks and opportunities." The group's global report assesses the FTSE Global 500, which had market capitalization totaling $22 trillion as of March 2008, accounting for "98 percent of the world's investable market capitalization." Global 500 companies, the CDP estimated last year, account for 5.8 percent of total global greenhouse gas emissions. ( 3)

Not all of these emissions are from business travel. Most are from activities directly related to corporate functions, particularly for utilities, manufacturers and energy producers. CDP and other climate change authorities categorize business travel pollutants together with other indirect emissions related to the supply chain or the use and disposal of company products. Within this category--known as Scope 3, as opposed to Scope 2 (purchased power) or Scope 1 (direct emissions)--the majority of respondents "list employee travel as the most significant source of emissions," according to CDP. "It is not surprising that employee travel is the most commonly reported category of Scope 3 emissions, as it is the easiest to calculate ... e.g., through expense systems, travel agents, suppliers, etc." ( 4)

Once measured, employee travel emissions "are also among the easiest to reduce. For example, Genworth Financial reports increased use of videoconferencing: 'We have recently installed high-quality videoconferencing at all major facilities to substantially reduce business travel costs and emissions. This metric will be tracked against departmental travel budgets.' " ( 5)

Clearly applying the mantra--prominently referenced in the 2008 CDP report--that "a business can only manage what it measures," dozens of other companies around the world have disclosed details on their production of greenhouse gas emissions, as well as plans to reduce or avoid business travel.

Nike is planning to make facilities and business travel activities carbon neutral by 2015. "Nike purchased our first offsets for the CO2 emissions from business travel in 2000," according to the company's 2005-06 corporate social responsibility report. "Since then, we have participated in the emerging voluntary market by procuring a total of 111,000 tons of CO2 to offset almost half of the CO2 emissions from our business travel during that period." Advertising and media firm WPP targeted a 20 percent reduction in its carbon footprint by 2010. At Philips, "we added a new functionality when employees book their travel--a pop-up window that suggests videoconferencing as an alternative." Dell committed to "net zero" carbon neutrality for business travel in 2008. Autodesk recognized that air travel in 2007 totaled 56 percent of the company's carbon footprint and was its "largest single source of greenhouse gas emissions." ( 6)

There are a variety of reasons for fighting climate change, but efficiency is as much a business issue as a social one. Respondents to an Association of Corporate Travel Executives poll ranked reduced operating costs as the "most important" benefit of climate action, followed by enhanced brand and public relations, improved productivity and quality, new products and services and reduced regulatory uncertainty. ( 7)

"Corporations' ability and willingness to monitor and report these activities reflects the inexorable rise of climate change from debate at the fringes of society to the boardroom agenda," noted CDP's September 2008 report. "Over the next 12 months, policy makers and negotiators from around the world will be trying to agree on a new global deal on climate change. It is essential that the voice of business and investors is heard clearly in these negotiations." ( 8)