INSIGHT
The EU's corporate sustainability reporting directive (CSRD): What travel managers need to know
With net-zero targets looming, the European Union (EU) has decided that a tougher approach was needed to drive change. The result is the introduction of the EU Corporate Sustainability Reporting Directive (CSRD). Following a decision to delay the introduction of these initiatives, businesses now have more time to prepare.
The approach changes how businesses report on their sustainability efforts, including those affecting business travel. For travel managers who have responsibility for a European travel programme, it makes sustainability reporting a must-do, not a nice-to-have.
What is the CSRD?
The CSRD EU directive wants to ensure that large EU companies and non-EU companies with significant EU business are more open about their sustainability information and efforts. It's building on what the Non-Financial Reporting Directive (NFRD) started. It’s no longer a directive, but a requirement, and is part of the European Green Deal's goal to cut greenhouse gas emissions by at least 55% by 2030.
Under the CSRD, companies must set emissions targets and report on sustainability metrics such as emissions, water usage, and waste management. They must also share information on social issues like how they treat employees, diversity policies, human rights commitments, and their efforts against corruption, bribery, and diversity in their company boards. So, it's not just about being environmentally friendly; it's also about more inclusive decision-making.
Does my company have to comply to CSRD?
Initially, CSRD only applies to companies with 1,000-plus employees and EUR50m+ turnover. The reporting requirement will come into effect in 2028.
Non-EU companies with significant operations within in the EU are subject to CSRD.
In regard to business travel specifically, complying companies will have to state their business travel emissions and submit their targets for business travel.
Why should travel managers care about the CSRD?
Under CSRD, companies must report 'Scope 3 emissions'. They cover emissions that are mostly beyond a company's direct control but can significantly impact their carbon footprint; consider emissions from flights, hotel stays, and rental cars. Companies with fewer than 750 employees get a pass on reporting Scope 3 emissions for the first year.
This shift means travel managers will need clear sustainability data on business travel, and ensure corporate travel policies align with the organisation's broader goals.
“CSRD isn't changing anything in terms of the reporting itself,” says Glenn Thorsen, Global Sustainability Lead - FCM Consulting. “It's mostly the fact that more companies are now legally required to report on their emissions, and most importantly, that Scope 3 is now also mandatory, and not voluntary as it has been in the past.”
Supply chains will also be scrutinised, due to not only environmental reporting, but the social element of CSRD. Travel managers will have easier access to information around human rights and how workers are treated, which can help them reduce the risk of supporting suppliers with poor environmental or ethical records.
Are there any other environmental, social, and corporate governance (ESG) regulations companies need to keep an eye on?
While none impact company travel policies and programmes as much as CSRD, the EU has introduced many laws and directives to accelerate change.
These include legislation to stop ‘greenwashing’ and misleading claims about a company’s sustainability efforts, and the Corporate Sustainability Due Diligence Directive which puts more onus on supply chains to truly be adhering to human rights and environmental claims. This article from BTN explains more about regulation affecting EU travel businesses.
How can travel managers take steps to onboard CSRD?
To make sure you're on the right side of the CSRD, here's a checklist for travel managers:
- Team up with your CSR/ESG colleagues to understand what data is needed.
- Figure out where your data collection might have gaps and work on filling them.
- Check if your current travel providers can help with the new reporting requirements.
- Choose partners who can give you the data you need on emissions.
- Get your KPIs in order, and make sure everyone's on the same page about how to measure sustainability.
How can my travel management company (TMC) help with CSRD?
Reporting: Your TMC can help you obtain your sustainable travel data, from your carbon footprint to how much emissions you could save. Even when travel programmes involve different booking tools and systems, FCM Platform, combined with human insight from Account Management, displays data such as CO2 emissions split across air (long-, mid- and short-haul), hotel and car rental. It’s easy to compare month-on-month and year-on-year too.
Travel policy: Your TMC can assist with making your travel policy more sustainable, depending which direction you want to take. You might introduce a carbon offsetting programme (we work with South Pole to offset!), aim to switch planes for trains, or look for more eco-friendly hotels.
Sustainable travel choices: Your travel technology can use icons or notifications to encourage travellers to book more sustainable flights, hotels or other transport options. For example, FCM Extension can pop-up to remind a traveller to think about the environment when choosing a flight.
Wider sustainability programme goals: If you think your programme might need a complete overhaul, that’s where FCM Consulting can help. They’ll dive into the current state of your programme, assess what could be done, and make recommendations that will bring real change.