The last couple of years have been busy when it came to sustainability
In 2024, the first wave of tougher mandatory regulation on sustainability disclosure takes effect as new European Union sustainability rules start to compel the largest companies operating in the bloc to begin gathering data on greenhouse gas emissions. These new rules - including the Corporate Sustainability Reporting Directive - also require companies to submit annual transition plans for reducing emissions.
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 - with the progress on meeting those goals available to corporate stakeholders and the public annually.
Not only have the EU imposed new mandatory regulations, so have the United Kingdom, Australia, Canada, India, and Singapore. The Securities and Exchange Commission in the United States is also expected to move in the next few months to adopt similar Climate Disclosure Requirements that would make formerly voluntary emissions disclosures mandatory for US publicly registered companies.
Most recently, the International Sustainability Standards Board (ISSB) - affiliated with the influential International Accounting Standards Board - 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.
After surveying sector members for a report expected to be released in the fourth quarter, the World Travel & Tourism Council (WTTC) and Oliver Wyman have concluded there is still considerable work to be done before the sector will be up to the task.
According to WTTC's new research, Travel & Tourism is currently responsible for 8.1% of global greenhouse gas emissions. While many of the sector's biggest companies have set 2050 emission-reduction targets, just as many have just started to consider how to address climate change in their business.
There is understanding and readiness, but a range of complexities
There is a wide range of understanding and readiness in Travel & Tourism when it comes to the upcoming reporting requirements, but navigating the compliance landscape will be no easy task, notes WTTC, for a variety of reasons.
This is especially significant for a sector with operations spanning multiple countries and enterprises that run from a few employees to thousands. "Even in a single jurisdiction, the complexities of managing multiple subsidiaries, suppliers, and partnerships will be daunting," it says.
These hurdles become even higher, considering that 80% of sector members are small and midsize companies with limited resources to invest in new personnel and technology.
A lack of resources, capabilities, and expertise to tackle demands of new regulations
One concern raised by most participants in the survey was the sector's lack of resources, capabilities, and expertise to tackle the demands of the new regulations.
In the past at many Travel & Tourism companies, sustainability personnel were more likely to deal with branding and marketing or operational issues than with accounting or data collection, says WTTC. But compliance with these kinds of rigorous sustainability disclosures "rises above a mere accounting exercise" to become "more of an organisation-wide shift in culture," it says, and notes sustainability teams will not be able to tackle the upcoming challenge alone. "More education and internal expertise on sustainability will be needed across organisations," it adds.
Data collection will be a challenge
Another challenge facing the sector that the survey highlights is data collection.
The broad and fragmented value chains of many companies in the sector, make it not only difficult to ensure that data is assembled in a timely manner, but also that the information on emissions - especially Scope 3 emissions, which are produced by a company's upstream suppliers and downstream users - is in fact accurate, says WTTC.
"With the absence of sector-specific guidance, some form of sector collaboration may be needed for the first few years," it explains.
Companies are struggling to reconcile the investment needed in new data collection capabilities with investment already being made in initiatives to reduce emissions and meet other environmental, social, and governance goals, according to WTTC.