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In a landmark move, the European Union is setting the stage for a more sustainable future in travel with the introduction of the Corporate Sustainability Reporting Directive (CSRD), effective January 2024. This directive mandates ‘public-interest’ companies, numbering approximately 11,500 across the EU, to commence sustainability reporting for the year 2024, with published reports due in 2025.

The CSRD, extending beyond large stock market-listed companies, now encompasses organizations with a workforce of over 500. Its primary focus is to monitor and report on travel-related activities, signifying a significant shift in the corporate travel landscape.

Andres Fabris, CEO of travel management firm Traxo, highlights a crucial aspect: the challenge of tracking employee travel booked outside official channels. The directive demands thorough reporting on ‘scope 3 emissions,’ including all business travel. Companies lacking robust travel management programs face the risk of inaccurate reporting, underscoring the need for comprehensive systems offering choice, convenience, and control.

The directive’s implications extend beyond corporate travel. Emilie Dumont of Digitrips points out the complexities introduced by the increasing blend of business and leisure travel, or ‘bleisure.’ Identifying the business versus leisure components of travel poses a logistical hurdle, demanding innovative strategies and tools from companies and technology providers alike.

Morgann Lesne from Cambon Partners foresees a shift in the travel M&A landscape and funding rounds. Post-CSRD, companies must align their environmental, social, and governance (ESG) reporting with the directive’s standards to avoid deal-breakers in equity events. This change necessitates an early start in data collection and compliance to meet the directive’s extensive requirements.

In the insurance realm, Sami Doyle of TMU Management underlines the importance of ESG scores in the underwriting process. Travel insurers are now increasingly scrutinizing ESG compliance, viewing it as indicative of a company’s long-term risk profile. The travel industry, aiming for net-zero goals, will likely face heightened scrutiny, with non-compliance leading to potential fines or legal challenges.

A significant positive outcome of the CSRD, as observed by Alex Barros of BEONx, lies in the hospitality sector. The directive encourages hotels to pursue sustainable profitability, moving beyond mere ‘greenwashing.’ This shift enables hotels to implement genuinely profitable and sustainable solutions, appealing particularly to eco-conscious corporate travellers. Consequently, hotels with advanced sustainability practices will gain a competitive edge by leveraging data to demonstrate their commitment and transformation towards sustainable profitability.

In essence, the CSRD is not just a regulatory requirement but a catalyst for a transformative journey in the travel industry. It presents an opportunity for companies to innovate, develop new strategies, and embrace sustainability as a core aspect of their operations. As the industry adapts to these changes, the ripple effect will likely be felt across various sectors, heralding a new era of responsible and sustainable travel.

The European Union, with this directive, positions itself as a leader in championing sustainability in travel. As companies gear up to meet these new challenges, the CSRD paves the way for a future where travel is not just about destinations, but also about the journey towards a greener, more responsible world.