Jackson Pek, SVP, group general counsel and ESG executive sponsor of Amadeus, reveals technology has a clear role in helping the industry reach its goals
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Guest Post: How can the travel industry reach its ESG goals?
The United Nations set 2030 as the target year to achieve the 17 UN Sustainable Development Goals, offering a roadmap toward peace and prosperity for people and the planet, now and into the future. Today, the travel industry is at a critical juncture, with ESG initiatives reshaping corporate responsibility and investment priorities. With consumer demand for sustainable travel options continuing to drive innovation, there are clear growth opportunities for companies that truly embrace sustainability.
There is also a clear message from regulators that can no longer be ignored when it comes to setting up ESG policies. Regulatory bodies have cracked down on greenwashing and have introduced more stringent measures to tackle attempts at ESG box-ticking.
Alongside this increased regulation comes a shift in the perception of ESG for businesses. It is no longer merely a check box requirement but a way for companies to mitigate risk, gain competitive advantage, attract talent and investment, and enhance the longevity of a company.
Trust is increasingly a strategic asset as transparency and authenticity become the industry standard. So, how is the travel industry responding?
Prioritising all elements of ESG
It is positive to see that many travel companies are responding to the increased demand for ESG policies and acknowledge that turning a profit on its own isn't enough. They recognise the need to be act ethically and be accountable for their decisions.
The industry’s level of investment serves as a key indicator of the priority being placed on ESG. Our recent research across the travel sector including airports, airlines, travel sellers, car rental providers and hotels, revealed that almost half (46%) of travel companies intend to increase their investment in ESG in 2024.
The research revealed different investment priorities in ESG initiatives across the traveler journey. Airlines are focused on improving the energy efficiency of their operations to reduce their emissions and on developing solutions for travelers to reduce their environmental impact. For hotels, energy reduction, health, safety and wellbeing, and responsible water management are top priorities. Travel sellers on the other hand are focused on reducing carbon emissions, while large companies are focused on sustainability education of employees.
This increased investment aims to contribute to a lower environmental impact, positive social impact and greater stakeholder confidence.
The research also highlighted the shared importance across all elements of ESG. In addition to mitigating environmental impact, social aspects such as employee well-being, diversity, equity, inclusivity, and promoting a more inclusive tourism industry that delivers a positive community impact at destinations are particularly crucial for the global travel industry.
Good governance is key to guiding responsible decisions, and strong governance paves the way for progress on environmental and social commitments. Alongside setting targets, companies need to continue reporting their progress in these areas and demonstrate high standards of ethics, integrity and transparency.
Despite growing momentum, the travel industry still faces barriers when it comes to translating intentions into action and fulfilling environmental commitments. Major factors include perceived high costs versus low financial gains, lack of technology and expertise, and insufficient buy-in from the C-suite.
So where do we go from here?
Businesses have clear goals and are aware of the barriers to progress when it comes to ESG. The question for us collectively is how can the industry provide targeted solutions and tackle these challenges head on?
The first step is for everyone in the travel industry to acknowledge and take action for their own impact – which is why at Amadeus, we are continuing work as an organization to address our own environmental and social impact.
Technology also has a clear role in helping the travel industry reach its ambitions. New technologies can help travel companies to reduce emissions, prevent environmental harm, and improve infrastructure so that funds can be saved and redirected into sustainable initiatives.
Sustainable Aviation Fuel is one promising example, delivering carbon emission reductions of up to 92% compared to traditional fuels. For consumers, search technology is being developed to prioritise sustainable travel options across all parts of their travel journey. Artificial Intelligence algorithms are just one way that AI can be used to help personalise recommendations for travelers based on their preferences. And technology can also play a pivotal role in facilitating an inclusive and accessible travel for all.
Such innovations are the key to restructuring and reengineering business in the travel industry to meet global challenges.
Industry collaboration is also paramount. By pooling expertise and resources, we can help each other plug the gaps and achieve more collectively. Collaboration with business partners, industry associations, academic institutions, and NGOs enhances collective knowledge and awareness, resulting in a multiplier effect.
Finally, we need a centralised framework for compliance on ESG. Again, this is about bringing everyone with us on the journey. In our recent research, the businesses we surveyed showed that sustainability is not only best practice but also a competitive advantage. A clear framework would ensure that investment is being channelled where it is most effective, and businesses are seeing results.
By taking a holistic and strategic approach to ESG, we can be part of the solution. Collaboration, combined with people and technology, can drive innovation to ensure travel and tourism continues to be a force for good.
