The US Securities and Exchange Commission recently announced proposal that would require certain climate-related disclosures in reporting is the latest reminder to companies that they could face competitive disadvantages in the future if they are not working to quantify and control carbon emissions related to business travel.
The proposal, now open to public comment through at least May 20, would require registrants to disclose both the potential impact of climate-related risks on their company as well as their own greenhouse gas emissions. Reporting of Scope 3 emissions, indirect emissions that include those from business travel, would not be required of all companies. However, those companies for which emissions are “material” would have to report that figure, as would those that have set an emissions-reduction goal that includes Scope 3 emissions, according to the proposal.
Additionally, the rules would “would provide a safe harbor for liability from Scope 3 emissions disclosure and an exemption from the Scope 3 emissions disclosure requirement for smaller reporting companies,” the SEC said.
Even with those carveouts, the proposal gives an extra boost to those travel suppliers that have been developing tools to help with carbon data reporting. CWT head of product management and travel management portfolio Charlie Sullivan, whose company last week announced a partnership with Thrust Carbon to provide point-of-booking carbon indicators, said the proposal “is further validation of the rising importance of sustainability and just another indicator showing the importance of understanding your travel-related carbon footprint. “
The rules are hardly out of left field, as corporate travel industry leaders have been warning for years that US companies would ultimately face more oversight of their emissions. The SEC proposal, of course, will face opposition. The ranking Republican on the US House Financial Services Committee, Patrick McHenry, in a statement called the proposal “tone-deaf and misguided” and that the “SEC should focus on its core mission: protecting investors; maintaining fair, orderly, and efficient markets ; and facilitating capital formation. ”
The longer trend, however, is going toward stricter disclosure requirements. Europe, the United Kingdom and Hong Kong all have been moving more towards regimes of mandatory climate disclosure, and last year, the United Nations launched the International Sustainability Standards Board, which recently published global guidelines on sustainability disclosure that it hopes can set a standard for jurisdictions around the world.
That’s part of the reason many companies have opted for voluntary disclosures, said James Dent, head of ESG and sustainability for TravelPerk, which earlier this year launched an open API to help companies measure their carbon footprint. That even includes some who would not be required to disclose their travel emissions data under the new rules.
“Companies who, a few years ago, realized this is actually going to happen, started to put practices in place,” Dent said. “This directive is still a first step, and Scope 3 will be mandated at some point.”
Of course, Forbes last year estimated only about 20 percent of U.S. companies currently voluntarily disclose emissions, and reporting can be uneven and incomplete even among those who do. There is still much work to be done on the travel side in terms of finding consistent measures and baselines, Conferma director of strategic relationships Paul Raymond said.
In that vein, payment providers could have a larger role moving forward. Raymond said Conferma is piloting a program where it can take payment data — and with virtual cards, that can cover not only travelers but also consultants, interviewees and other sources of travel within an organization — and provide climate scoring with the help of third-party firms like Thrust Carbon. Ultimately, it could reach across a variety of third-party partners that might have different expertise in different types of climate reporting, perhaps one source for travel and others for restaurants, for example.
“It gives you a complete view of the trip in terms of purchasing, which you are then able to give to the likes of the [Thrust
Carbons]”Raymond said.” Using virtual payment, you can get a much broader picture. “
Regardless of what happens with the SEC requirements, TravelPerk’s Dent said companies should be strengthening their climate reporting simply because it’s good business.
“If companies see this as an opportunity, it’s a great way to set themselves apart from their competitors,” he said. “When they become more sustainable businesses, they can drive more increased revenue and have more access to capital.”