“Is the travel and tourism sector ready for mandatory emissions reporting?”
The World Travel & Tourism Council (WTTC) says it is asking this question and focusing on this issue, while the disclosure of sustainable development information is about to change from voluntary to mandatory.
The WTTC says the travel and tourism sector entered 2023 "like a marathon runner hitting the last six miles of a race." It fought its way through almost two years of the COVID-19 pandemic — only to be overwhelmed, as the disease waned, by an unprecedented surge in travel by people tired of quarantines and lockdowns."
The next challenge
Despite the significant uptake of travel, WTTC says many companies are still having trouble filling their workforces. The next challenge is accelerating the transition from voluntary to mandatory sustainability reporting, and is the industry prepared?
First mandatory regulations on sustainability disclosure take effect in 2024 as the European Union's sustainability rules begin to force companies to measure greenhouse gas emissions.
These new rules, including the Corporate Sustainability Reporting Directive, also require companies to submit annual transition plans for reducing emissions.
According to WTTC, plans must be compliant with limiting the rise in Earth’s temperature to 1.5 degrees celsius, a target set by the 2015 Paris Climate Agreement.
WTTC points out that the last couple of years have been busy with sustainability.
According to the council, the EU imposed new mandatory regulations, as did the United Kingdom, Australia, Canada, India, and Singapore.
In the next few months, the Securities and Exchange Commission is also expected to adopt similar climate disclosure requirements that will make previously voluntary emissions disclosures mandatory for US publicly traded companies.
Most recently, the International Sustainability Standards Board (ISSB) released what will eventually become the international norm for sustainability accounting.
All the new standards require disclosure of scope 1, 2, and 3 emissions under the Greenhouse Gas Protocol for corporate accounting.
New report and survey
Given the influx of new mandatory standards, WTCC says it’s time for travel and tourism to assess how prepared the sector is.
Following a survey of industry members, the WTTC, and Oliver Wyman, an international management consulting firm, say the sector will still require considerable work before it can meet the challenges.
The new research points out that Travel & Tourism is responsible for 8.1 per cent of global greenhouse gas emissions.
While many of the sector’s biggest companies have set 2050 emission-reduction targets, many have just started to consider climate change.
As a result of the survey, travel and tourism appears to have a wide range of understanding and readiness for the upcoming reporting requirements.
In a sector where operations span multiple countries and enterprises have tens of thousands of employees, navigating the compliance landscape won't be easy.
As 80 percent of sector members are small and midsize companies with limited resources, these hurdles become even more challenging.
In response, WTTC and Oliver Wyman will provide a tool to assist the sector in navigating these requirements in their upcoming report.
The survey also uncovered that most respondents expressed concern about the lack of resources, capabilities, and expertise to meet the new regulations.
Traditionally, sustainability personnel have dealt more with branding, marketing, and operational issues than accounting or data collection.
According to the WTTC, compliance with these kinds of sustainability disclosures goes beyond accounting practices to become a cultural shift.
The council says sustainability teams will not be able to meet the challenge alone and organizations will need more education and internal expertise on sustainability.
Data collection is another challenge for travel and tourism companies because their value chains are fragmented, making it difficult to collect data in a timely and accurate manner. WTTC suggests that due to the lack of sector-specific guidance, the first few years may require some form of sector collaboration.
WTTC also points out that companies struggle to balance new data collection capabilities with efforts to reduce emissions and meet other environmental, social, and governance goals. The rising demand has also required more spending on personnel and operations across most organizations.
But ready or not, says WTTC, the regulations have arrived, and especially for the biggest companies and networks, the time to act is now.