Internal Carbon Pricing Solidifies Business Travel as Critical Tool in Climate Action

As 2024 begins, we know how important sustainability remains on the global stage and for business.  More than 7,000 companies are taking action, including 2,500 small- and midsize businesses, in Science Based Targets. Corporate travel programs, which are already integral to business success, can also be a key partner to deliver enterprise sustainability goals and engage with stakeholder across the value chain. When it comes to measuring carbon, travel programs are already tracking and reporting carbon emissions, displaying emissions in booking tools, and using qualitative questions and quantitative rankings to inform sourcing decisions. In 2024, there is an opportunity for travel managers to further elevate their travel program as a key organizational tool by launching an internal carbon pricing scheme and aligning with enterprise sustainability programs.

What Is a Carbon Price?

Governments use carbon pricing to identify the costs of greenhouse gas emissions, link them to their source and apply a fee, either as a flat fee or a dynamic carbon amount. Think of the Danish government’s recent announcement to implement a fee of 50 Danish crowns (US$7.35) by 2030 for European flights, or governmental programs like the EU’s emissions trading scheme which priced emissions at 100 euros per tonne in February 2023. This isn’t just a European trend: In September, the Biden administration ordered the U.S. government—the world’s single largest purchaser—to consider the social cost of carbon in agency budget processes and to start building climate costs into government procurement.

Companies are embracing carbon pricing, too, as a way to assess climate-related risks and opportunities. They may use real carbon pricing to create funds and make investment decisions, or they may use a flat fee to educate stakeholders. The global reporting framework CDP, formerly known as the Carbon Disclosure Project, reports that “nearly half of the world’s 500 biggest companies by market cap either put a price on carbon or plan to do so in next five years.”

Carbon Pricing Will Elevate Business Travel

We have seen the role of business travel managers become more elevated in recent years as they leverage their remit to navigate change or challenging, fast-evolving landscapes. Climate change is the opportunity we face today, with business travel once again playing a critical role in how enterprises meet the moment. Through carbon pricing, the purchasing power of business travel can be wielded and enable an enterprise to meet its sustainability objectives and take climate action.

Educates Travelers – Simple, accessible information is key to better decision making and behavior change. A carbon price for an air ticket engages travelers about the impact of their trip and gives a common metric across the business. It can complement online booking tool displays of carbon emissions generated from air travel and provide an actual cost. A carbon price can also be a common metric for engaging with supplier stakeholders and discussing services and options in a value chain.

Aligns Travel with Enterprise Initiatives – Carbon pricing is a key element of clients’ CDP reports. Many companies already report in that framework and information is already available for travel programs to use.  Aligning the travel program with the enterprise ensures a consistent approach to sustainability across an organization and provides more collaboration with key stakeholders within the business, ultimately enhancing the travel program. 

Creates Budgeting Opportunities – The pressure and urgency for companies to do more on sustainability and achieve emissions targets continues to increase. But just like carbon, everything has a cost. To help overcome budget constraints, companies can use carbon pricing to create a centralized budget to make investments in decarbonization activity such as purchasing sustainable aviation fuel or participating in carbon compensation programs. By launching a carbon fee, a travel program can co-fund key sustainability projects with the broader business and prove that travel powers environmental progress.

The number of companies implementing carbon pricing is growing daily, and they aren’t contained to a certain sector. I’m currently having carbon pricing conversations with companies that cross pharma, professional services, heavy industry, tech, finance and more. As they each evolve their approach to business travel sustainability, carbon pricing can be a first step, and I encourage companies to create an initial fee and then scale up quickly. Ultimately, carbon pricing helps companies create a plan for the future, and it’s not one-size-fits-all. You can evaluate different pricing schemes from regional or industrial activity, but laying a solid foundation that simultaneously educate travelers, aligns travel with company initiatives and contributes to climate investments can only make business travel a more strategic player as companies strive to reach 2030 climate goals.