Jamie Freed and Rajesh Kumar Singh

SYDNEY/BOSTON – As companies seek drastic measures to lower carbon emissions, major corporations are preparing for a serious hit to business-class, an important revenue driver, experts and industry executives say.

Several companies, such as HSBC, Zurich Insurance, Bain & Company and S&P Global (NYSE:), have already announced plans to quickly cut business travel emissions by as much as 70%.

As investors and environmental activists press for greater reductions in indirect climate-related emissions, some are contemplating a carbon budget.

Around 90% of all business travel emissions come from flights. It is therefore the best option to set reduction targets for your company.

The airline industry last week committed to reach “net zero” emissions by 2050 https://www.reuters.com/business/aerospace-defense/airlines-accelerate-climate-pledge-industry-talks-2021-10-04 at a meeting in Boston, decades beyond the corporate travel emissions cut targets. “It’s going to be hard on airlines and they’re going to need to adapt,” Kit Brennan, co-founder of London-based Thrust Carbon, which is advising S&P and other clients on setting up carbon budgets.

He said that he believes what passengers will see is a more unbundling business class, where they might be able to enjoy all the perks of business without having to take up a seat. It all boils down to how much space the plane takes up.

According to World Bank research, flying business class in economy class produces three times more carbon than that of economy class due to the fact that more seats are used and less empty.

Change already under way

In the pre-pandemic era, approximately 5% international passengers traveled in premium classes. These class accounts for 30% international revenue according to IATA airline group.

Many companies have made savings by changing their travel policies in response to the pandemic.

Bain’s chief sustainability officer Sam Israelit stated that his company is evaluating carbon budgets in offices and practice areas for reducing travel emissions by 35% per year.

He said that he believes that more generally, companies will have to take this initiative if they want to meet the ambitious targets everyone has set.

Corporate travel agencies and companies are investing in sophisticated tools that can measure the flight emissions. These instruments take into account factors like the type and routing of the plane and the class or service.

Nora Lovell Marchant vice president for sustainability, said: “We don’t see a lot companies taking a very extreme approach like just cutting travel. That impacts their bottom lines.” American Express Global Business Travel. But we’re seeing more travellers asking for transparency in order to help them make better decisions.

Global ratings agency S&P, which plans to reduce travel emissions by 25% by 2025, found that 42% of its business class use was for internal meetings, its global corporate travel leader, Ann Dery, said at a CAPA Centre for Aviation event last month.

Airlines are going green

U.S. carrier JetBlue plans for about 30% of its jet fuel for flights in and out of New York to be sustainable within two to three years https://www.reuters.com/business/aerospace-defense/jetblue-buy-sustainable-jet-fuel-over-1-bln-use-new-york-airports-2021-09-29. Robin Hayes, Chief Executive of JetBlue, stated that businesses will want to tackle climate change aggressively. But we believe that they can do it in a way which still allows business travel.

Last week’s emissions targets for airlines were based on increasing sustainable aviation fuel use from 0.1% to 65% in 2050 and new engine technologies.

Greg Foran (Air New Zealand chief executive) stated that “if we get to net zero carbon emission by 2050 everyone has to play their role here.” The problem is not limited to airlines. Not only will it be the fuel suppliers, but also governments. Customers will eventually have to purchase into it.”