EU Lays Down the Law on Business Travel Sustainability

Any travel manager with responsibility for a European program can no longer ignore sustainability, even if they wished to. A growing body of legislation, largely driven by the European Union, is compelling companies to account for and reduce their greenhouse gas emission-producing activities, including business travel.

Sustainability laws are also increasingly dictating the activities of business travel suppliers, especially airlines, with potential consequences for their customers on issues including price and route network.

At the BTN Group Sustainability Summit in London in May, UK director of the clean transport campaign group Transport & Environment Richard Hebditch warned buyers that the legislative burden on business travel will only move in one direction. “The future is one of more regulation until we start to get a grip and reduce emissions, and transport is a really difficult sector to tackle,” said Hebditch.

What follows is a rapid, non-exhaustive guide to the key existing and impending European sustainability laws that travel buyers are likely to find relevant to their work. The first section covers regulation governing corporations and initiatives that could make it easier for travel program to go greener. The second section focuses on laws governing airlines and airports.

Corporate Regulation

Approved in November 2022 and scheduled to phase in from January 2024, the EU’s Corporate Sustainability Reporting Directive raises the number of businesses in the EU subject to sustainability reporting requirements from an estimated 11,700 to around 50,000.

Those requirements are also much beefier than in 2014’s Non-Financial Reporting Directive, with more than 1,100 data points to report. Qualifying companies must set emissions targets, select a baseline and report progress towards those targets. Businesses also have to disclose information about their sustainability due diligence process, and actual and potential negative effects of their operations.

U.S.-based companies should pay particular attention to the fact that non-EU companies with significant operations within the EU will be subject to the CSRD, and that Scope 3 emissions, which include emissions produced by business travel, are within scope. In the U.S., businesses are usually required only to report on Scope 1 and 2 emissions. Pending regulation with the Securities & Exchange Commission may change that as new rules are expected this fall.

A companion piece of law-making to the CSRD is the Corporate Sustainability Due Diligence Directive aka EU Supply Chain Law. Draft legislation was published by the European Commission in February 2022, and final “trilogue” negotiations are under way between the Commission, European Parliament and European Council of member states.

The supply chain law applies to larger companies, which must fulfil their due diligence obligations along the value chain regarding human rights and the environment. Again, they must identify actual or potential negative impacts, and take appropriate measures to prevent, mitigate and remedy them.

Also on its way is legislation to discourage “greenwashing,” when companies make misleading or unsubstantiated claims about how they have addressed climate change. Alleged greenwashing is already the subject of litigation in Europe, the prime example in the travel sector being FossielVrij NL versus KLM.

The environmental group is suing the Dutch flag carrier under the EU’s Unfair Commercial Practices Directive. VossielFrij claims that KLM’s Fly Responsibly marketing campaign was based on mitigations such as sustainable aviation fuel and offsetting that are insufficient to meet Paris Agreement climate goals and continue to damage the environment.

Unlike the Unfair Commercial Practices Directive, two proposed new directives will focus explicitly on greenwashing. The Commission’s Green Claims Directive will punish environmental claims, such as carbon neutrality, made without clear, objective and verifiable commitments that are then regularly monitored. In May 2023 the European Parliament voted for a directive that is largely similar but goes even further by severely limiting the ability to make sustainability claims based on paying for carbon offsets.

Trilogue will resolve whether offsetting is eventually included or not. Regardless, “In four or five years’ time, all green claims made in the EU will be very strictly regulated,” said Emmanuel Mounier, secretary general of lobbying group EU Travel Tech, at the BTN Sustainability Summit.

In France, this is already happening. Its Climate and Resilience Act, published 2021, allows claims of carbon neutrality to be made only under very strict conditions.

Other initiatives under way in Brussels could ease two particular frustrations travel managers regularly experience in their quest for improved sustainability. The first is inconsistency in calculating CO2 emissions. BTN Europe reported last year on a travel manager who compared the same London-New York flight on five different booking tools and found the emissions estimate for an economy seat ranged from 310kg to 1,218kg.

The European Commission is working on a strategy, expected to be unveiled in the next few months, called CountEmissions EU, to counter inconsistent reporting that it says is “hindering the overall effectiveness of greenhouse gas accounting as a policy tool to incentivise environmentally friendly business and consumer choices for transport/mobility.”

CountEmissions EU will provide a “single European framework for calculating GHG emissions data of transport operations/services.” Importantly for the complex eco-system that constitutes managed travel, there will be a “verification regime” that will also govern data exchange between different parties.

The other frustration for buyers is limited availability of rail content in booking tools and agency reservation systems, especially for international journeys. The travel industry blames this deficiency primarily on the unwillingness of state-owned rail operators to sell through indirect channels.

For a couple of years, hopes for change have been pinned on Multimodal Digital Mobility Services (MDMS), a planned EU legal framework intended to ensure access to all rail content for all distribution channels.

The European Commission is expected to outline its final proposals for MDMS imminently. But travel associations, including GBTA, buyer lobbying group BT4Europe and EU Travel Tech, warned in June 2023 that the Commission is considering watering down the proposals by making it mandatory for rail operators to offer the opportunity to look in indirect channels, but not necessarily to compel allowing booking too. Mounier told the BTN forum that access to rail content must be made available on “fair, reasonable and non-discriminatory terms.”

Aviation Regulation

The European Climate Law, adopted 2021, requires member states to act in accordance with the Paris Agreement by taking steps to reduce GHG emissions by at least 55 percent by 2030 compared to 1990 levels and to reduce GHG emissions to zero by 2050.

The European Commission’s Fit for 55 package of legislative reforms are intended to achieve the objectives of the European Climate Law. Three measures in the package relate specifically to aviation. Taken together, IATA claims this trio will add €38 to the average fare for European flights and €205 to transatlantic flights.

The first measure is RefuelEU Aviation, which stipulates that all fuel made available to aircraft operators at EU airports contains a minimum share of sustainable aviation fuels of 2 percent by 2025, 34 percent by 2040 and 70 percent by 2050.

Next is the Emissions Trading System, which gives certain sectors capped emissions allowances for which they must usually pay. Currently, 35 percent of allowances distributed to airlines are free.

A revision of the ETS going through the last stages of formal adoption will mean airlines no longer receive free CO2 allowances from 2026, forcing them to buy permits for every tonne they emit. The reform also promotes adoption of SAF through revenues generated from the auctioning of five million allowances.

Finally, a proposed update of the Energy Taxation Directive would end aviation fuel’s long-standing exemption from taxation. The minimum tax rate would be raised progressively over ten years while sustainable fuels would continue to be zero-rated.

The UK, no longer obliged to follow EU law as of 31 December 2020, has announced rather more modest plans for aviation. Under the Jet Zero plan announced in July 2022, its government committed to at least ten percent of jet fuel used in the country being made from sustainable sources by 2030.

Also worth watching out for are direct restrictions on air traffic by individual European states, though action so far has been limited and challenged heavily. France’s Climate and Resilience Act also aimed to ban many domestic flights, but the proposals were watered down by the European Commission, which insisted routes must have a high-speed rail alternative with sufficient frequency for passengers to spend eight hours at their destination. Only three routes were deemed eligible and all had been axed in 2020 anyway. Five routes were reprieved, including Paris Charles de Gaulle to Bordeaux, Lyon, Nantes and Rennes.

Austria bailed out Austrian Airlines in 2020 on condition that it eliminated all routes where a rail journey can take less than three hours. In 2021, Spain unveiled in its Agenda 2050 with the intention to ban all domestic flights and impose a frequent-flyer levy but no concrete proposals have been announced.

In June 2022, the government of the Netherlands announced it would reduce flights at Amsterdam Schiphol airport from 500,00 annually to 460,000 in November 2023 and to 440,000 in November 2024. The plan was blocked in April 2023 by a Dutch court on the grounds of not following due process and insufficient consultation.

Panellists at the BTN forum warned that more state attempts to curb air capacity can be expected. “We’re going to have to fly less, and governments are going to have to intervene because this is an existential threat to humanity,” said Mark Stevenson, co-founder and chief impact officer of climate removal company Cur8.