Why Carbon Pricing is Important to Global Business Travel
Reinventing Business Travel
According to Paul Abbott, CEO of American Express Global Business Travel (Amex GBT), the impacts of business travel are not trivial; they account for up to 75% of profits on certain flights.
By adopting carbon pricing, companies are not only paving the way towards the adoption of sustainable aviation fuels but are also redefining the economic landscape of corporate travel.
His thoughts were shared in anticipation of the World Economic Forum's Annual Meeting in Davos.
Abbott suggests that regardless of a company's stage in its sustainability journey, integrating the cost of carbon into business travel expenses is a feasible starting point. This action facilitates more accessible investments in low-carbon technologies, such as Sustainable Aviation Fuel (SAF).
The Mechanics of Carbon Pricing in Travel
What exactly entails carbon pricing? It's a method that discourages emissions by placing a monetary value on the pollution created.
As Abbott explains: "By embedding the cost of carbon into business travel, investment in low-carbon tech like SAF can become more attainable for any business."
Companies can incorporate this strategy into their broader business model, helping economic growth align more closely with climate goals.
This merge of carbon pricing and decarbonization efforts lays a foundation for achieving global net-zero emissions goals.
In practice, carbon pricing for business travel places a direct fee on the emissions from flights.
These funds are then reinvested into low-carbon technologies, enhancing the sustainability of corporate travel practices. Amex GBT has taken an active role in helping businesses apply and manage these carbon fees across their travel activities, investing in projects like SAF.
Three Steps for Implementation
Abbott outlines three essential steps for incorporating carbon pricing into business travel:
- "Apply a fee to air transactions. A flat fee (e.g., $10 per flight), a categorical fee based on distance or class or an emission-based fee that aligns with a company's preferred carbon calculation methodology."
- "The fund then scales in line with the environmental impact of a company's business travel."
- "Funds can be invested into initiatives that can help decarbonise the business travel programme such as SAF, electric vehicles, research & development and more."
Companies like Sanofi and Swiss Re, along with other large corporations, have already embraced this model, proving that sustainable business practices can align well with corporate profitability and environmental responsibility.
Lucian Alexandru of Sanofi says: "Emissions-based carbon pricing enables us to combine economics, sustainability, and technology to strengthen our business travel programme and boost funding to invest in decarbonisation initiatives such as SAF."
Ultimately, Abbott reminds us that "any company can do this," indicating that while multinationals may lead the charge, smaller enterprises also stand to benefit significantly from adopting carbon pricing schemes.
This approach not only secures a sustainability budget but also fosters growth and long-term viability in an increasingly eco-conscious market.
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