The EU’s climate reporting rules have changed – here’s what travel providers need to know

In April 2021, the European Commission launched a new set of rules for companies operating in Europe. The ‘Corporate Sustainability Reporting Directive’ – or CSRD, for short – required firms fitting certain criteria to publish a report about their climate footprint, and the effect of their business on people and the environment. This was followed by the ‘Corporate Sustainability Due Diligence Directive’ – or CSDDD – setting out similar requirements for a company’s supply chain.

The announcement was met with a mixed response. Some were glad to see EU policymakers taking steps to tackle the climate crisis. Others felt the protocols were too burdensome, and would take time and effort, slowly eating into the profit margins of European firms. In the Travel & Tourism sector, most fell somewhere in the middle: they supported the aims of the legislation, but pointed to the vast number of small suppliers and family-run operators who might struggle to meet the requirements, or who would end up outsourcing their reports to expensive lawyers and consultants. Even if not directly in scope, suppliers would feel the ripple effect of the requirements of bigger firms upstream, tasked with appraising their full value chain and sourcing practices.

Shannon Guihan, Chief Sustainability Officer at The Travel Corporation

Then, a few weeks ago, everything changed. On 26th February, the EU Commission published a new package of proposals designed to simplify the reporting rules, walking back some of its original requirements. Around 80% of companies that were previously in scope would no longer be required to disclose. The move was a response to the Draghi Report – led by the Italian politician, Mario Draghi – which set out some of the ways in which Europe has struggled to compete with other advanced economies, and what EU policymakers could do to keep up. But what does the rollback mean for Travel & Tourism? How should companies respond, and what might come next? To find out, we spoke to Shannon Guihan, Chief Sustainability Officer at The Travel Corporation. Shannon also oversees the group’s not-for-profit organisation, the TreadRight Foundation.

 “The reports are a lot of work,” says Shannon. “Before you publish, there’s a considerable effort to first understand your carbon footprint – knowing what’s in scope, where your emissions come from, and whether you need to look at the companies in your supply chain. This is a heavy enough lift without yet considering the necessary value chain insights required by CSRD”. The Travel Corporation began reporting on its environmental impact in 2021, with impressive detail. “We record our entire footprint, including Scope 3 emissions,” explains Shannon. “That includes travel itineraries – everything from when we pick you up on arrival to final departure. Every meal, every excursion, every transfer is accounted for”.

Now that the rules have changed, will Shannon be slowing down any of this work? “Absolutely not,” she confirms. “We’re still going to go ahead and publish annual impact reports. We were never doing them for legal reasons anyway. There are elements of CSRD – such as the required double materiality assessment – that are just good practice, so we’ll take lessons and guidance from the EU protocols and incorporate them into our existing reporting structure. I think it’s useful. But even if it wasn’t, our underlying motivation hasn’t changed. The need to create value through ESG and sustainability while maintaining destinations and natural assets, for the long term, remains good business. That’s not going anywhere.”

The Travel Corporation will continue to publish annual impact reports

Would she recommend that others in the sector do the same? “Every travel provider is different,” Shannon says. “For the larger companies, I would advise people to carry on with their materiality assessments. It’s a useful exercise – and it’s a good way to future-proof your business. Even if you’re not in scope at the minute, you might be eventually and it’s a risk not to be prepared for when things shift.”

What about the supply chain? How might smaller firms be affected by this change? “Travel & Tourism, as a sector, is heavily SME-run,” says Shannon. “There was always going to be a knock-on effect for smaller companies – that hasn’t changed. But I do not believe my suppliers, especially the smaller ones, need to worry.” Shannon sees this as an opportunity. Without the stringency of an official EU protocol, businesses are free to tailor their climate plans to their particular needs. “Don’t expend resources telling me, as a buyer, what you’re doing or not doing” she advises. “Invest instead in tactics that matter: low-carbon transport, energy efficiency, and renewables. If it helps to report things along the way, great. But start by doing what you can.”

Shannon advocates for energy efficiency in Travel and Tourism

For more ambitious firms, The Travel Corporation offers a good model. The company spans some twenty brands in more than a dozen countries, offering river cruises, touring, safaris, destination management, and more. The group has clear, science-based targets and a meaningful plan to reduce emissions. And in 2022, the company launched its flagship Carbon Fund – a dedicated pot of funding, paid into by the business, that will be used solely for sustainability initiatives. These include investments in solar energy, biofuels, a data management system for hotels, and support for small providers in the supply chain.

This is in addition to its not-for-profit foundation, TreadRight, which supports TTC activities by financing small-scale natural solutions to climate change. TreadRight’s most recent project is in Venice. The city is famous for its art, history, and canals – but the surrounding threatened salt marshes are vital to its survival. The Venetian lagoon is the largest wetland in the Mediterranean basin, acting as a vast carbon sink. It’s also rich in biodiversity, home to thousands of fish, birds, and plants that depend on its brackish waters. Last year, the TreadRight Foundation launched a new partnership to stop erosion and protect the lagoon, working alongside a team from the Barena Association, local fishermen, and scientists at the University of Padua.

“We found a really beautiful nature-based solution,” Shannon explains. The Barena Foundation builds small wooden fascines – woven structures made from biodegradable materials, that shield the lagoon from damage. The barriers give plants the purchase they need to grow and establish roots, protecting the soil from erosion. This stability also helps the wildlife. Locals have witnessed the return of native species, including cuttlefish – popular with fishermen and tourists alike. In busy restaurants, Venetian-style cuttlefish, slowly stewed with black ink and tomatoes, is a must-try for first-time visitors. “It’s a great example of how tourism can support itself by protecting the natural systems on which it depends in partnership with the community who knows best”.

TreadRight’s most recent project is in Venice

Shannon has worked in Travel & Tourism since she was 16. Her first job was as a sea kayak guide in her home province of Newfoundland, Canada. ”I don't think any other sector will take me now,” she jokes. Over the years, she has seen how sustainability has risen up the agenda. With the latest change of heart from European legislators, is she worried? “My concern is not how our sector will respond,” Shannon says, “but about the bigger debate – momentum at the macro level. We need policymakers on board with climate action. While some businesses will stall, those that are able to realise the clear value in forging ahead will do so, and they will be the winners.” If she could be granted one wish by European leaders, what would it be? “We need the will and the investment for this transition. We need a plan for the climate on the scale of the Marshall Plan.”

To learn more about The Travel Corporation and its climate plan, see here. Learn more about WTTC.org