The Business Travel Carbon Footprint: Spend-Based Measurement and Benchmarking Exercise

Abstract

In the face of inadequate international governmental action to prevent climate change, many multinational companies have begun to measure and reduce greenhouse gas (GHG) emissions from Scope 1, 2, and, less commonly, Scope 3 sources. This project considers a Scope 3 GHG emissions source, business travel. The GHG Corporate Protocol defines the activities producing GHG emissions from business travel as Scope 3 Category 6 carbon sources. Air travel represents the fastest-growing source of global GHG emissions, with up to 20% driven by business travel. With increasing awareness of these environmental costs, added to shifting perceptions of travel due to COVID-19, and continued improvement in virtual meeting technology, many organizations are assessing and reconsidering their business travel carbon footprints. On behalf of one such company (“The Client Company”) which is an international manufacturing business, this study totaled the expenses resulting from GHG Protocol identified travel activities and non-emissions producing travel activities. Business travel expenses from the years 2019 and 2020 were compared to highlight potential cost savings from a minimized travel scenario approximated by the COVID-19 pandemic. Using these travel expense accounts, a beginner tier spend-based carbon footprint was calculated for company-wide business travel in 2019 and 2020. To provide context for The Client Company, a peer benchmarking review was performed to identify business travel practices among similar companies and to identify innovative business travel practices.

Key findings include: 1) Business travel expenses decreased by 80% between 2019 and 2020, while sales and headcount remained essentially constant (less than 2% variation). 2) The business travel carbon footprint decreased by 80% between 2019 and 2020, with almost 80% of the carbon footprint resulting from air travel. The business travel carbon was underestimated, especially for passenger car travel, due to the challenges of collecting car mileage and/or expense data. Business-related restaurant meals, which are not included elsewhere in the GHG Protocol, would have contributed more than 6% to the overall business travel carbon footprint. 3) Business travel carbon footprint reducing activities can be categorized from most beneficial to least beneficial as follows: a) Travel volume-reducing AND GHG emissions-reducing AND cost-reducing (e.g., choosing to meet virtually rather than traveling to a meeting); b) Travel volume-maintaining with different choices AND GHG emissions-reducing AND neutral to higher cost (e.g., selecting an electric rental car rather than a fossil fuel-powered rental car); c) Travel volume-maintaining AND GHG emissions-reducing AND higher cost (e.g., buying carbon offsets).

Key recommendations include: 1) Carefully consider the opportunity cost of focusing on business travel as a manufacturing company. 2) Aim for complete and easy travel data collection through travel providers. 3) When implementing business travel carbon footprint lowering initiatives due to cost considerations, companies benefit most from travel reducing strategies, followed by cleaner travel activities, followed lastly by targeted carbon-reducing strategies.