The U.S. Securities and Exchange Commission's 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 U.S. companies ultimately
would face more oversight of their emissions. The SEC proposal, of course, will
face opposition. The ranking Republican on the U.S. 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 toward 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 that 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
do 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."