Keeping Business Moving Sustainability of Corporate Travel Venue: The London Stock Exchange Date:
31st March 2011
Second Thought Leadership Forum
Keeping Business Moving Sustainability of Corporate Travel How face-to-face meetings fit into the business toolkit required for a low-carbon world. Reed & Mackay’s Second Thought Leadership forum focused on the issue of sustainability in the context of travel management and its obligation to support the economic imperative to keep business moving. Reed & Mackay chief executive Richard Boardman told delegates that for various reasons sustainability no longer occupied as prominent a position in many corporate agendas as it had several years ago. He said that such inconsistent focus on the issue of sustainability made it “not surprising that it’s confusing for many corporates”. “Keeping Business Moving - Sustainability of Corporate Travel” set out to address how to reconcile the commercial necessity for meetings and travel with the undoubted finite supply of fossil fuels in the world.
Technological breakthroughs are vital, whether it
Carbon offset projects that include environmentally
is in terms of developing alternatives to travel for
friendly initiatives are also a vital ingredient in
meetings (such as video- conference, telepresence
developing ways of managing a world in which
and web conferencing), or in decreasing our
the cost of carbon will inevitably become a much
dependence on oil for travel.
Research and development are
It is imperative for all managers
“It is imperative for all
identifying new designs and
to formulate a forward-looking
composite materials in the
managers to formulate a
strategic approach which will
construction of aircraft so that
enable their companies to remain
air travel needs less fuel per passenger mile. The prospect of the sustainable
approach which will enable their companies
economically competitive in the face of the near certainty of higher oil prices.
to remain economically
and efficient production of viable
biofuels’ means that flights could become less dependent on hydrocarbons.
The event was moderated by Jonathon Porritt whom
Richard Boardman described as one of the heroes of his youth, stating, “There is no one better placed
Different ways of flying such as continuous take-off and descent or more direct flight paths could also improve aviation’s fuel utilisation.
to chair this forum”.
Business as usual? Environmental evangelist Jonathon Porritt, former Chair of the UK Sustainable Development Commission, and Founder Director of Forum for the Future, says that business needs to travel but that it needs to do so more responsibly. Delegates empathised with Jonathon Porritt’s carefully industry - interrupted only by external factors such as crafted description of the conflict and confusion that volcanoes, strikes, terrorism and political upheaval! many experience when trying to carry out business in a responsible way. Flying was both necessary for Actual experience reinforces this message because business and brought huge benefits, aviation keeps growing. If you look but commercial dependency on at the trends in emerging economies, “For companies aviation had been founded on a the projected year on year growth business model reliant on cheap oil. is astonishing. the need to fly is still
part of their every
Jonathon Porritt pointed out the That’s no surprise because aviation dichotomy between reassuring has brought huge benefits to the day lives” messages about the continuity of world and people. The privilege of the world as we knew it and dire flying is cherished by many people warnings about limited supplies of fossil fuels. more than other consumer products or services. According to the former head of Friends of the Earth, media reports and images reinforced a belief that it was “business as usual”. He pointed out that stories about new aircraft orders, private jets and new airport taxi services, coupled with images of glistening new airports in Shanghai and Dubai, left us all believing in a continually growing and modernising aviation
But the Forum’s moderator pointed out that these confident messages about continuity were counterbalanced by the near total consensus that climate change was happening. He cautioned delegates not to get dragged down into pointless debates about whether it was or wasn’t happening - it is.
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A much bigger problem lies in the inconsistency of political responses, ramping up the regulator risk for airlines and airports having to make decisions against such an uncertain backdrop. In Jonathon’s view, our modern lives have been shaped by the availability of relatively cheap oil. But those days are gone.
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Saudi Arabia and other Gulf States. Most analysts were now working on the basis of price parameters of $75-$110 a barrel, a very different price from the $35-$55 of only six years ago - and very different again from the $200 a barrel which Jonathon himself believe’s possible.
“in the future carbon
Aviation remains an important element of commercial strategy. higher cost element The solution is for business to Travel arrangements today are make itself less vulnerable to than it is today” affected far more by price than possible spikes in the price of oil. carbon. People still look for value He highlighted the importance for money, but in the future carbon will be a of continually considering virtual substitutes for materially higher cost element than it is today. meetings, and for radical innovation in terms of new aircraft, new fuels, and take-off and landing “Peak oil”, the point at which oil production reaches techniques. its high point and then begins a terminal decline, was inevitable as the supply was finite. In addition, there We need to secure the benefits from aviation without are questions about the true levels of oil reserves in worsening the costs it brings in its wake.
will be a materially
The role of carbon offsets Despite its critics, carbon offsetting has a role to play in the corporate response to climate change says Jonathan Shopley, managing director, The CarbonNeutral Company. Many companies implement well-crafted travel response to non-local business requirements. Business policies to reduce their carbon emissions, however travellers also often opt to fly on routes which are expectations about the amount of savings that can equally well served by rail. Less corporate travel be achieved this way should remain realistic where would impact positively on both cost and productivity. a business’s profitability is dependent on their However, we will need sound alternatives if we are to executives travelling. As a result, change behaviour, and recognition that The CarbonNeutral Company an executive’s value is best measured “the CarbonNeutral recommends that a carbon by their effectiveness, rather than the Company recommends offsetting programme be part balance on their air-miles account. that a carbon offsetting of any corporate environment strategy. Videoconferencing and other travel programme be part alternatives can have a very positive of any corporate Travel can contribute 30-40% of effect on both costs and productivity. environment strategy” a service based company’s carbon Managers should adopt informed emissions and a lot of these reduction targets and recognise that it emissions come from air travel because aeroplanes use is easy to make initial cuts but that it becomes a lot of fuel and emit greenhouse gases into the upper progressively more difficult to cut a company’s carbon atmosphere, making flying considerably more carbon emissions by similar proportions. We are in a fossil intensive than ground travel. fuel economy. It is quite common practice for service basedcompanies to resort to air travel en mass as a first
The CarbonNeutral Company believes that including carbon offsetting in the corporate environmental
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strategy is crucial since carbon offset projects are that is not dependent on price fluctuations. This not critical to meeting a global reduction target to stablise only reduces carbon emissions but avoids fire hazards climate change. Additionally, introducing clean and unhealthy fumes from burning kerosene. Through technology projects in Africa and Asia can develop this project, local individuals have the opportunity infrastructure in parts of the world to increase their modest incomes where none existed, which benefits through basket making, silk “We must remember local communities and helps the weaving and tailoring at night, that reducing carbon developing world grow in a helping to generate extra income. emissions has the same sustainable, low carbon way. Carbon finance provides the necessary microfinance needed impact, regardless Jonathan Shopley shared with the to access these solar lighting of which country the delegates the benefits from one of systems providing a sustainable reduction takes place in” The Carbon Neutral Company’s long term benefit. offsetting projects. Developed by Selco, this Solar Lighting Systems project is based in We must remember that reducing carbon emissions rural India where many homes depend on kerosene has the same impact, regardless of which country lamps as a source of light in the evenings. the reduction takes place in. In developing countries with rapidly increasing populations it makes sense To put the potential of this project in perspective, if to facilitate projects that improve the way of life for half the population of India - that’s 500 million people individuals substantially whilst encouraging growth - use 1 litre of kerosene every month, it equates to 1/2 in a low carbon manner. Carbon offset projects billion litres of kerosene burnt monthly. By replacing accelerate the transfer of clean technologies to the the kerosene lamps with solar lighting systems, this developing world including wind power, hydro power, project provides a reliable, clean source of electricity solar power and energy efficiencies.
Will the road-worrier replace the road-warrior? Changes in working patterns and the availability of technology are conspiring to make companies question the need to travel like never before, says Tim Stone,, European Marketing Director for Cisco. These days, employees do not just have their desk than a higher paying job without such flexibility. phone and computer. They are bringing in iPads and The result is that collaborative workspaces are mobile devices powered by Google’s Android operating replacing face-to-face meetings as the world becomes system - which became the world’s more mobile, social, virtual number one operating system earlier and visual. “The world is this year. The new generation telepresence becoming more As well as the hardware, employees systems, which companies other mobile, social, virtual are accessing software beyond the than Cisco produce as well, are at corporate office suite - networks such the forefront of this collaboration. and visual” as Facebook and LinkedIn - while Companies are not obliged to video is becoming the predominant make the investment in these user of bandwidth on the web; some 90% of traffic systems themselves; hotels offer such facilities for will soon be video as opposed to traditional text and rent by the hour. still images. The technology is getting easier to use all the time as A recent survey found that 66% of people said they telecoms providers work out how to handle interwould take a job with less pay and with more flexibility carrier sessions, connecting people across different in device usage, access to social media and mobility service provider networks.
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Cisco itself is a model of how telepresence systems can save carbon as well as money.
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different countries, increasing the global reach of the event to underserved countries or individuals who would not have been allowed to travel. The event also represented a reduced opportunity cost for those who were not sure if they could justify first time attendance.
Since 2007, the company has identified savings of some $695 million as a result of 173,707 meetings avoided, including $261 million in improved productivity. On top of that, we calculate that The biggest challenges currently faced by Cisco and we have saved 375,000 tonnes of other conferencing technology â€œThe cost of telecoms carbon from using telepresence. companies are those of time zones and varying telecom prices. It still for some countries, The companyâ€™s telepresence suites remains a big issue that despite the particularly those in are in regular demand as a result hours you gain from not travelling, developmental stages with utilisation of 64% in a typical to link up the likes of London, can be too great eight-hour working day, something Sydney and China on a to justify not meeting that other companies would do telepresence meeting means really well to adopt. inconvenient timings. The cost face to faceâ€? of telecoms for some countries, Telepresence systems will also ignite change in how particularly those in developmental stages can be too companies hold conferences, with more and more great to justify not meeting face to face and for some delegates attending virtually as opposed to in person. areas of the world it will take cultural adjustments to take on board the benefits of such technology. Cisco regularly hold live events in North America, Europe, Mexico and Africa and held the first hybrid There is no doubt that there are cost and carbon event - with both in-the-flesh and virtual delegates savings to be made through utilising the advancing in 2009. The most recent attracted 10,000 people in technologies, and with great tools like telepresence person but also 4,500 virtual attendees from 185 on the market the opportunities are ever increasing.
Making sustainability part of your DNA Change is in the air, says Virgin Atlantic’s Chief Commercial Officer Julie Southern Bodies such as Friends of the Earth tell us that in order to avoid the worst impacts of climate change, all of us, no matter where we are in the world, have I Taking responsibility for their direct impacts to limit our annual carbon footprint to 2 tonnes per things like waste generation, energy use, water annum by 2050. That’s the equivalent of two return consumption and sustainable sourcing flights to New York…without taking into account I Working with other your energy consumption at home organisations, such as airports, or the office, your driving, the manufacturers and air traffic “Individuals will have to products you buy and the food management bodies on the limit their annual carbon you eat. “big picture” issues footprint to 2 tonnes I Engaging with both customers Virgin Atlantic is also listening per annum by 2050. and staff to the Government, which wants That’s the equivalent to be confident on the global But why does sustainability of two return flights to stage that aviation can play a part matter to an airline? in meeting the exacting climate New York” Airline customers, particularly change targets set for 2050. There corporates, are under pressure to is already an appetite for change reduce their carbon footprints and business travel through initiatives such as the WWF’s One in Five represents a big chunk of that footprint, particularly Challenge, getting companies and other organisations for companies in the service sector. Individual to cut the number of flights they make by 20%. passengers also need to do their bit. Sustainability means different things to different people but Virgin Atlantic consider the following:
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Aviation has - perhaps out of proportion to its 2% contribution to global emissions - become synonymous with climate change in the media and we have to address that. If more justification to believe in sustainability were needed, it also makes sense commercially.
On the latter point, Virgin hopes to use 10% biofuels by 2020, a target that Virgin boss Sir Richard Branson would like increased. However, the immediate challenge is getting biofuels certified for regular use by commercial aircraft, something the airline was told by those in the know would take 15 years. After much â€œAviation has - perhaps pressure, it hopes to get the green out of proportion to its 2% light for regular use of biofuels contribution to global this year, just over three years after they were first tested. emissions - become
Virgin has set itself a target of a 30% improvement in fuel efficiency based on 2007 levels. It plans to synonymous with climate achieve this through new aircraft For an airline like Virgin Atlantic, change in the mediaâ€? such as the new A330s coming being truly sustainable means onstream now and the 27% more harnessing staff and passenger efficient Boeing 787s. In addition to this, the airline enthusiasm as well as humanising the big issues so that hopes to gain benefits from higher load factors, everyone can understand them and engage in doing air traffic management improvements and the use something about them. Above all, it is about building of biofuels. sustainability into the airlineâ€™s DNA.
How can aviation reduce its footprint? Much has been made of the fact that the aviation industry has to do something to get its environmental house in order. Good progress has been made to date, but a significant challenge lies ahead says Kevin Goddard,, from the environmental affairs team at European aircraft manufacturer Airbus. Due to the projected growth in the aviation sector, make the right decisions from an environmental further measures will be necessary to meet the perspective very early on in the development process. long-term industry goal of a 50% CO2 reduction of emissions by Airbus deploys a total life cycle â€œAircraft manufacturers 2050, against a 2005 baseline. approach to the environment, have already cut the which looks at all aspects from the carbon emissions of This is not because aircraft initial design process all the way manufacturers are sitting back and to the disposal of the product. aircraft by 70% and doing nothing. In fact, over the past As this entails a heavy reliance on reduced the amount of 40 to 50 years - the same timescale the supply chain for parts, aircraft noise they make by 75% that we are looking ahead manufactures need to work closely planemakers have cut the carbon with suppliers in order to find a in the past 40-50 yearsâ€? emissions of aircraft by 70% and solution to the carbon challenge. reduced the amount of noise they make by 75%. This means that as well as looking at the individual elements, such as light weight structures, aerodynamic As the development of a new aircraft takes five or six performance and the fuel efficiency of the engines, years and that aircraft, once delivered, will be in companies such as Airbus play a key role in integrating service for 20 to 25 years, it is absolutely critical to these technologies at an optimal aircraft level.
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One of the great hopes is the development of biofuels, which can be expected to make a similar contribution to cutting carbon emissions as the wider deployment of new generation aircraft, such as the Airbus A380 and A350.
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also becoming more widespread. The A350, the next generation replacement for the A330, is made with an airframe made from 53% composite materials.
â€œOne of the great hopes The biofuel concept has already been is the development of proven in principle through test biofuels - the challenge is flights by the likes of Virgin Atlantic and Interjet but the challenge to scale-up production now is to scale-up production with with sustainable value sustainable value chains in conjunction chains in conjunction with with refiners and farmers.
refiners and farmersâ€? Economic measures, such as the European Emissions Trading Scheme, will also play their part in encouraging airlines to choose lower carbon options, but this must be introduced in an effective and fair way. With a global scheme being the ultimate goal. Composite materials - where two or more materials are used together to give lighter weight alternatives to traditional aircraft staples such as aluminium - are
The long timescale for introducing new aircraft also means that applying new carbonsaving ideas to existing aircraft is proving popular. The A320neo, for example, is fitted with more efficient engines and wing tip devices called sharklets which improve fuel efficiency in the cruise phase of a flight.
This means carbon emissions can be cut sooner than by waiting for next generation fleet to become available. Improvements in Air Traffic Management systems can also be beneficial. Techniques such as Continuous Descent Approach, where the plane descends more smoothly, can be implemented today and help the aviation sector do its bit for the environment.
Any questions? Here are a selection of the questions posed by delegates to the forum: Are biofuels less carbon intensive than traditional fuels and, if so, why? Exactly the same level of carbon will come out of the back of an aircraftâ€™s engine from a biofuel as from traditional aviation fuel. The difference is the neutral effect of crops. Different fuels and feedstocks will have different carbon intensities. So you need to look at the whole cycle and how we produce and transport fuel to an aircraft, not just the emissions from a flight. In terms of technologies, Biofuels arenâ€™t the only area of interest. A lot of research work is also being done on electric aircraft, but this is a longer term ambition. When you appoint a supplier, do you look at relative carbon intensity as part of the procurement process? The basic aim is the need to get people from A to B at a certain time. Then we look at the cost and then weâ€™ll think of the carbon. A lot of our travel is in the UK and we use a lot of trains. We can work out our rail carbon footprint but putting people on coaches reduces the emissions to 30% of what they would be on trains. We make the decision on both carbon and cost and the coach is also 50% cheaper. Will aviation continue to grow and what can be done about its footprint? People hold travel very dear and it is not going away any time soon, particularly because it is such an important growth factor in the global economy. However, there may be some corrections in the level of demand as people consider the environmental impact of their air journeys. While countries such as the UK look at moving away from air to high-speed rail, in continents such as Africa, hub-to-hub routes operated with smaller
aircraft may spring up. These may rival the travel alternatives in terms of carbon emissions in the not too distant future. However, if oil continues to be as expensive as it is or more expensive, then travel will have to be repriced as it is too cheap. Carbon offsetting helps because it does just that. Beyond price, financial instruments may be needed to incentivise airlines to renew their fleets with more environmentally-friendly aircraft. This will be particularly important if biofuels do not prove to be the panacea that many hope. Some of the potential growth in aviation will be mitigated by greater home working and higher speed residential broadband connections, allowing greater use of web conferencing. Is there consistency on carbon reporting? The Department for Environment, Food and Rural Affairs issued the standard on carbon reporting some time ago but it does not differentiate between different airlines. Airlines will take it upon themselves to differentiate to the market; where they compete on service and in-flight entertainment now they will compete on fuel efficiency and capacity utilisation in the future. [On the day of the forum, the Department for Transport and Defra launched new guidance on measuring and reporting greenhouse gas emissions for work-related travel, including how to source the necessary data.] One film industry client said that their crews were already choosing to fly Virgin Atlantic because of the environmental stance of the airline including its work on biofuels.
What to take away from the Thought Leadership Forum The Thought Leadership Forum enabled delegates to raise their concerns about the lack of clarity in reporting standards and the consequent challenges posed for buyers making informed choices. Suppliers were hampered in making long-term strategic decisions because of what appeared to be inconsistency and confused thinking among regulatory authorities. Both buyers and suppliers are clearly keen to accommodate sustainability in their medium and long-term planning.
passenger mile. Technology solutions such as telepresence were providing effective substitutes for travel but were not appropriate in all cases.
Speakers and delegates were in broad agreement that our social and economic structure had been built upon fossil fuels but that there was a limited supply of oil and that limited supply in the face of rising demand would inevitably feed through to the cost of travel.
Both suppliers and buyers would be increasingly looking at more fuel efficient and productive ways of conducting business.
Future product development among airlines such as Virgin Atlantic and suppliers such as Cisco and Airbus took account of the need to make more productive use of carbon. Measures ranged from more efficient ways of flying to making aircraft that would use less fuel per
Aviation would continue to grow but not at the same rate as in the past and not uniformly in all parts of the world. Both presenters and delegates believed that awareness of the effects of limits on the supply of oil was vital for informed travel strategy, management and decision-making.
If you would like further details on the next Reed & Mackay debate please contact Lyndsey Atkins on 0207 246 5687 or firstname.lastname@example.org
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Published on May 5, 2011