EU Lays Down the Law on Business Travel Sustainability

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

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.

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