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From building the right reporting, to creating awareness, to guiding behavior, and making direct contributions, there¡¯s a lot that organizations can do right now to increase their sustainability.

We asked Ryan Hamilton, Senior Value Consultant for the Value Experience Group at the SAP »ÆÉ«¶ÌÊÓƵ organization and Sally Crotty, Senior Consultant and Sustainability SME for our partner, TCG, to share their expert perspective on how to transform corporate sustainability programs in a two-part podcast series. In the previous episode, they provided insights on key terms on how to build a roadmap to sustainability for organizations.

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Transcript:

Ryan Hamilton:

Hello everyone. Welcome to the second in our two-part series on sustainability in travel and entertainment expenses. Once again, I'm Ryan Hamilton, Senior Value Consultant with the SAP »ÆÉ«¶ÌÊÓƵ [solutions] Value Consulting team. I'm joined again by my colleague, Sally Crotty with TCG consulting. Sally.

Sally Crotty:

Oh, it's great to be back to talk to you again today Ryan. Excited to join another podcast with you. Hi everybody. I'm Sally Crotty and I'm a Senior Consultant with TCG consulting. I've been in the industry for over 30 years in a number of roles, predominantly in travel management. I am the subject matter expert for sustainability within TCG consulting. I'm really excited to talk to you again today.

Ryan Hamilton:

Thanks, Sally. Like I mentioned, this is the second of our two-part series. Today we're going to talk about some real practical applications for sustainability in T&E. We're going to talk about starting to act on a framework and what it means to corporations here and now to make progress. Is it fair to say that through TCG's methodology and just in general, realistically, we need to think about this in terms greater than just what is every possible methodology for reducing my organization's emissions? TCO (Total Cost of Ownership) to me speaks to the fact that there is an intersection between economic sustainability and ecological or environmental sustainability, which is that there are some costs. Can you talk about how TCG thinks about environmental sustainability as one piece of cost of ownership?

Sally Crotty:

Yeah. Absolutely. We can look at it in a way that many organizations have a desire to "go green" and some are prepared to pay to achieve this. And some maybe not, or maybe some don't quite understand where they sit today in order to understand what emissions they can try and reduce, or they may not understand that part of their processes that they're involved in today may actually be creating more work for them and therefore not making them as sustainable as they could be. Just earlier this year, TCG announced sustainability as our 18th metric for TCO TMPE (TCO Approach for Travel, Meetings, Payment, and Expense Programs). We have 18 components within the TCO TMP methodology and we introduced sustainability as this 18th component. From cost of ownership perspective, we're not only looking at what can be done to reduce emissions for travel. We're taking a holistic view and looking at the total costs of managing sustainability.

Sally Crotty:

It could be the additional cost of reporting for sustainability. The manpower needed to manage this. The actual travel booking process and expense process. The whole workflow, the end-to-end process for the traveler from the moment they maybe need to gain pre-trip approval to actually book their travel to them then making the booking, to ensuring that the policy is in place, that they're aware of the emissions that they may be associated with the flight that they've chosen, to the payment process and through to the traveler completing their expense report when they return from a trip.

Ryan Hamilton:

Essentially it's a balancing act or an optimization problem where organizations are figuring out the best mix of staying economically sustainable while maximizing their environmental sustainability. Is that a fair summary?

Sally Crotty:

Yes. Yeah. I would say is. If we look at it from a »ÆÉ«¶ÌÊÓƵ perspective, from the booking process and using »ÆÉ«¶ÌÊÓƵ Request to gain the pre-trip approval, to booking in within »ÆÉ«¶ÌÊÓƵ Travel, to completing the expense and ultimately accessing the reporting that comes from that as well. Then, if we take a mature customer that has a fully-implemented travel and expense policy globally, it would be relatively straightforward to measure reduction in CO2 emissions for them. However, a company that maybe have different methodologies in place or different processes in different locations, or maybe have come together from a couple of organizations who've maybe merged, that can be much more difficult for them. We look at the best processes for them in order to manage that effectively.

Ryan Hamilton:

You've mentioned a couple of times that in order to improve your emissions, it sounds like one of the big hurdles is establishing a realistic understanding of what your current emissions are. I think we'll spend a lot of time talking about how [SAP] »ÆÉ«¶ÌÊÓƵ [solutions] can help with that. But for someone who's listening from maybe one of the less-implemented organizations or an organization that hasn't started to tackle this yet, can we walk through a typical, I guess, travel experience for a business traveler and talk about some of the decisions that are being made along the way and how those are affected or how those are affecting sustainability. For example, I know you've mentioned to me before that the question really starts with, should I travel or not? You mentioned »ÆÉ«¶ÌÊÓƵ Request a couple of times. How are companies thinking about that?

Sally Crotty:

Well, companies today, I think since the pandemic came about and suddenly everybody was having to adapt to a new way of working, people working from home and suddenly businesses that didn't have a work from home culture were suddenly making changes in order to continue operating and having to set up employees to work from home. We saw a huge reduction in business travel, of course, because many people couldn't travel at all. We also saw a huge reduction in commuting. Scope three emissions were drastically reduced overnight. Even though we are keen to start traveling again for leisure purposes or to visit family and friends, for business travel, we're finding that policies are changing a little bit and there's also a clear duty of care that's needed for the employee as well as they start to travel again.

But also, we need to really consider that as we start to travel again, that we should do that in a more sustainable way. We are finding that companies are assessing their needs to travel and what this looks like in the future. For example, some companies are saying that they're allowing business-critical travel only, for example. Or, they are ensuring that they travel on business only when necessary. Or it could be that if it's client-related travel, then it that's fine. But if it's an internal meeting, then that may be handled in a virtual environment now. We are finding, and of course, again, I'd like to caveat this, that it does vary very much by the organization and what their organization's needs are.

But I think if we can bring back travel, that's great for the industry and we want to see that happening, but we just want to maybe think about sustainability in more detail and really focusing on the options available. Whether or not we might take a rail journey instead of a short-haul flight, for example. Particularly possible within the UK or Europe so that's a viable option-will reduce the emissions created by the company, but also fulfill sustainability needs as well as reducing emissions. It's all part of a sustainability policy. Sorry about that.

Ryan Hamilton:

No worries. You hit on a lot of important things here that I want to make sure we unpack. As the pandemic happened, we got to experience essentially as a side-effect or almost on accident, the idea that simply traveling less is hugely impactful to emissions. As we come out of this, a lot of the organizations, it sounds like, are re-evaluating what they allow travel for. Which is both an economic gain, as travel is expensive, but also a great sustainability gain. Look, I think to be fair, a lot of organizations that are a little bit more nervous about some of the sustainability imperatives are probably saying that travel less or do less is a little bit scary, right? If you talk to the average sales person, the idea that they're going to be allowed to travel less is great on its face, but I think would scare a lot of folks who feel like their travel is an important part of completing their job and being good at what they do. Travel less is one option that you're seeing in the fields.

Sally Crotty:

Yes. Definitely in some cases, but where there is still a need to travel, so let's say it's revenue-generating or sales-related, that would be, I'm sure in most organizations, that could continue. It's more in reducing maybe the internal meetings that could be handled virtually instead of needing to be face-to-face.

Ryan Hamilton:

Yeah. That makes a lot of sense. And then you touched on a second thing, which I think might be overlooked by folks who have spent less time on this, which is, you mentioned the example of with travel in Europe or the UK sometimes rail might make more sense. If you account for airport time, security, flights, the inevitable delays, because everything's overbooked, trains are not only a more convenient option in some cases, but also much more sustainable. Airplanes taking off and landing emit a huge amount of greenhouse gases. I think that's a theme that we should explore when we're talking about methods of reducing emissions in T&E, which is not travel less, but option to travel better. I'm wondering if you have any other examples. You mentioned hotels earlier in our conversation, but what are organizations looking at when it comes to traveling better?

Sally Crotty:

Okay. Well definitely lots of things out there and lots of different ideas that we're seeing, but let's take a few examples. Let's take company A and company B. Company A, professional services company. They've always traveled in business class, internationally, very regular travel, lots of frequent travelers. They would, let's say, travel to their destination and stay in a really lovely luxury hotel with two to three restaurants and extensive leisure facilities. And then let's consider a company B who maybe have a similar-sized organization in terms of turnover, revenue, but they are maybe manufacturing organization, handful of travelers who travel frequently. And their policy only allows coach-class travel domestically and internationally. Actually their policy states that they must take the lowest logical fare option, even if that means that they take have to take connecting flights to reach their destination rather than a direct service.

Immediately we start to make these comparisons. We can take company A who are traveling in business class, now that's more expensive to travel in business class. There is more of an environmental impact because they are taking up more room on the airplane for example, than it would be traveling economy as a comparison. However, if we take company B, even though they're traveling in economy, if they're having to take two flights to reach their destination, then they equally could be emitting as much CO2 as company A. There are many different factors to consider. Even when taking a connecting flight, it may be that those two connecting flights are actually more sustainable. They may be newer aircraft. They might have lower emissions. Whereas, the company A direct flight potentially could be a very old aircraft.

It has far higher emissions. There are lots of different things to consider in terms of load factors on the aircraft, the number of business-class passengers, the amount of freight they may be taking as well. There are lots of considerations which would have an impact, but to start off from a very simple calculation, if you can consider that your CO2 emissions may be similar traveling from A to B, then that's a good starting point to just be aware of those emissions for those particular flights.

Really if we evaluate the scenarios, have a look, direct flights can sometimes be more expensive yet they maybe have less of an impact on the environment depending on the load factors, the class of travel, the aircraft type, the airline even. Different airlines are becoming more sustainable than others. Some use sustainable airline fuel to operate, whereas others have not got to that stage yet. These are more and more things that we're hearing about in the industry. Clearly the airlines want to make their travel more sustainable. I know that for example, United Airlines have committed to being carbon neutral by 2050. Now, that sounds quite far away from that, but it that's a real achievement to become actually carbon neutral for a global airline. Some interesting things happening.

Ryan Hamilton:

Absolutely. I think now that you mention it, the airline I usually travel with has committed to donating a small portion or I suppose spending a small portion of any full fare ticket on some carbon offsets, which is something that I want to talk about in a moment. But I think you also touched on another point that I want to reiterate. It sounds like the more you look at this, the more infinitely detailed it can get. How much weight am I taking on the plane? How many connections do I have? Is a business-class ticket that's going to be sold anyway emissions that are attributable to me or emissions attributable to the airline?

I think that degree of complexity can start to scare people off. But is it fair Sally, to say that there are diminishing returns to the level of fineness on your optimization matrix? So in other words, if step one is establish our emissions, and step two is start to reduce them, is it fair to say that even just biting off okay, why don't we minimize connections and take trains if it's time neutral. Is it fair to say that those big easy steps will get you a lot further than, or at least most of the way there compared to if you're considering all 800 factors?

Sally Crotty:

I think those first steps are really important. I think any company, if they're not doing anything today, they really have to start somewhere. I think just having a basic measurement in place today, understanding how many miles they travel and how they're calculating their emissions would be just a really good place to start. However, I'd like to look at the bigger picture attached to this as well, where I mentioned TMPE earlier. Travel, meetings, payments, and expense. That total Cost of Ownership-related to that because when you think about it, we can do all of these different things and travel on different aircraft or take direct flights versus connecting flights, but also we can improve other things that can make the company more sustainable.

For example, implementing a global card program, a new payment method, providing contactless payments, improving expense processes to speed up the whole booking process and the expense process for the traveler can also reduce emissions because let's take a traditional company that is still working in a very manual way with invoicing and expenses. Then if you can implement a [SAP} »ÆÉ«¶ÌÊÓƵ solution or a [SAP] »ÆÉ«¶ÌÊÓƵ-type solution into that business, then suddenly they can start becoming more sustainable in terms of paper reduction, receiving invoices electronically for example, ensuring that payments, everything is made electronically and even automating processes that before would have needed people to do. If we automate those processes, then we can make the business more sustainable for the long-term as well.

Ryan Hamilton:

Absolutely. I think that brings me to the next topic that I really wanted to discuss which is, where our two organizations really fit into this. When I think of [SAP] »ÆÉ«¶ÌÊÓƵ [solutions], I think of [SAP] »ÆÉ«¶ÌÊÓƵ [solutions] and sustainability as really we're the tool that allows you to actually move the needle on this. We've mentioned a couple of times, step one is understanding where you're at. You can't make an improvement if you don't know what you're improving. I think having a unified platform like [SAP] »ÆÉ«¶ÌÊÓƵ [solutions] is key in that, right? Not only because [SAP] »ÆÉ«¶ÌÊÓƵ [solutions] has purpose-built environmental impact reporting, which it does, but also that unified single source. If folks are going to five different sites and maybe a travel agent to book travel, it's much harder organizationally to gather all of that information and get a unified sense of exactly what is being emitted.

And then you talk about things like a credit card feed or direct receipt integration with travel vendors where we're getting much richer data on travel, which is key. The first area I see [SAP] »ÆÉ«¶ÌÊÓƵ [solutions] contributing is in reporting. The second would be in creating awareness. Individual employees are not going to solve a problem that they don't know exists. If you're not being confronted with the idea that you've bought the most emitting flights or that your expenses are in the top one percentile, you're probably not even thinking about the emissions as you travel. Awareness goes hand-in-hand with reporting, but rather than being at the organizational level, it's at the individual, employee level. And the third area I can see »ÆÉ«¶ÌÊÓƵ contributing is actually starting to guide behavior. This is where there's a lot of overlap with the expertise that you and TCG bring to the table, which is how do we create policy, both for travel and expenses that helps us meet our goals and what should those goals be? Which is your field of expertise.

Lastly, really quickly, you did mention on some things that are I think often overlooked as well, which is that an automated program like [SAP] »ÆÉ«¶ÌÊÓƵ [solutions] is actually going to contribute directly to sustainability goals by cutting paper out of the process in a lot of places. Contactless credit cards, eliminating invoices and receipts, sharing data automatically. That is directly reducing to sustainability goals as well. I can think of four broad areas where [SAP] »ÆÉ«¶ÌÊÓƵ [solutions] plays an important role. Like I said, reporting, awareness, behavioral changes and actual direct contributions. I guess my question in long-winded fashion would be, if you can really summarize down what TCG is bringing to the table on top of that. My understanding is it's really the expertise to utilize all of those four opportunities that I just described.

Sally Crotty:

Yeah. Absolutely. Well, we have expertise within each different area. Within travel, with also meetings, within our payments expense and invoicing as well. With our expertise within TCG, we're able to work with our customers to implement the best program for them and optimize their performance really or put in place what they really need to, as I mentioned before, become more sustainable for the future. I'd like to just touch on a few different points that you mentioned. First of all, reporting is really, really key. Especially where you said there could be different agencies around the globe. I think I touched on that earlier also, but I think it's really important to have that one central source of information if you can. And let's face it, we could have travel management company in place, but on occasion, it may be that some bookings are made outside of the TMC, or you could have more than one TMC in place and therefore our expense data and the [SAP] »ÆÉ«¶ÌÊÓƵ [solutions] data that we have would give us a full picture of everything that we're doing.

Whether or not it's the meetings that we've been paying for on by an invoice, for example, or whether it's understanding not just the travel emissions related to business travel, but also the commuting emissions attributed to commuting or company mileage. That's where I think [SAP] »ÆÉ«¶ÌÊÓƵ [solutions] can provide that fully end-to-end process for a customer. I think that's really a key part of it, but also you're absolutely right. As we've mentioned earlier, we're looking at the purpose of travel now. Policies are being changed or modified in order to provide the employee with duty of care, but also not just that, still to focus in on the emissions, to focus in on cost. I know that within [SAP] »ÆÉ«¶ÌÊÓƵ [solutions], those settings can be put in place to ensure that travelers are using the most sustainable airlines, that they may be working to the preferred airlines within the travel policy, for example.

They understand their emissions as they're booking. They obtain the approval before they travel. There are all these things enabled within the booking tool, but also they can have pop-up messaging to remind them of different policies that might be in-place or maybe the best airline that they should be choosing in order to be more sustainable. I think there are many different things that can be done today, and we're maybe not quite at the stage of being able to display emissions by class of travel just yet. We can't account for maybe an equipment change so you've maybe booked a flight on a particular airline, and on the day you travel, they've changed the aircraft. We can't account for that, but it will give you a really clear picture of somewhere to start from and to base your measurements on, and then to therefore put some targets in place in order to reduce emissions. We're looking at reducing, we want to replace. We don't want to generate more emissions. We want to just reduce them where we can. We're not saying don't travel, we're saying travel, but just travel more sustainably where you can.

Ryan Hamilton:

Absolutely. It's a bit of a spend governance in maintaining that balance between cost and sustainability. It's a bit of a controls and compliance question. If an organization has committed to meeting certain targets, they need to have controls in place that create those guide-rails that get us to the target we've committed to. [SAP] »ÆÉ«¶ÌÊÓƵ [solutions] brings the reporting. TCG brings the understanding of what to do with that reporting and how to achieve goals. And then you just circle back to [SAP] »ÆÉ«¶ÌÊÓƵ [solutions], which actually allows us to implement the policy and plan that TCG has helped come up with. I want to finish us off here with just a few quick grab-bag questions. We've already answered where a company should start if they haven't started, which is just understand where you're at. What would you say from your perspective or experience in working with organizations, what are some of the challenges that an organization faces when they first start to look at sustainability?

Sally Crotty:

Well, some of the main challenges really are in relation to of course, as we mentioned before, the reporting. Multiple data sources, different expense information, expense data. That's one of the challenges. That some trips and hotels are sometimes booked outside of the agency and therefore you can't get a true picture unless you look that expense status. There are some of the challenges. And then, of course, online booking tool functionality as well. It can provide emission values at the point of sale, but of course there are some challenges around the class of travel and things like that today.

There are some of the main challenges. I also think today many companies look at carbon off-setting and have been focusing in that area. That's better than doing nothing at all. Absolutely. But we should really focus on "reduce, remove, replace." Look at making those reductions in the emissions that we have today and trying to remove those as well, as much as possible. And also consider who that company might be off-setting with. It may be that they can reduce emissions, but also they may still need to off-set some emissions because the can't reduce enough from just some of the policy changes that they put in place.

It's about ensuring that the company that you may off-set with are going to actually fulfill their obligations because it's very difficult to maybe check if that tree has been planted for that organization. What I would say to any company is start small. If you're not doing anything today, start small and scale up, really find out within your organization, who is already looking at this, if anybody. If you're a travel manager, have you got a sustainability team or a sustainability manager that you need to align with? Try and understand what is in place today, because there will be, depending on your organization, there'll be emissions and in other areas. I would also recommend that really focusing on who the other internal stakeholders within the organization, who they are and who would be beneficial to engage with or align with in order to put some more sustainable processes in place, it might be a human resources team.

It could be that finance needs to be aware of different sustainability goals as well. And also, maybe your supply chain, that's a really key part. Ensuring that you're working with sustainable suppliers. Those suppliers that have similar goals or who are keen to meet their own sustainability targets. There's a lot to do. We've already spoken for quite some time around this and we could go on, I guess, but if it's even doing something small, such as, I don't know, promoting the rental of hybrid cars, for example, that would be something that you could do.

Ryan Hamilton:

Sorry to cut you off. It's worth probably reiterating that in a lot of these cases, especially for first steps, there's not a lot of cost benefit analysis to be done. For example, taking that rail, instead of that short haul flight is not only more sustainable, it's quicker, it's often cheaper, a better use of employee time. There's really no trade-off other than changing your mindset. Sally, I want to ask one last question here which is, what would you say to a skeptic? To frame this a little bit more, you have someone who believes sustainability is important and something we should address as a society, but is maybe leaning toward the idea that in the context of operating their business, they have an obligation to focus on value for their customers, for their shareholders, for their employees. What would you say to someone who is skeptical about addressing this in a business sense?

Sally Crotty:

Yeah. I think the answer is in the science. It speaks for itself. There are different ways of traveling more sustainably, as you've mentioned. There are processes that can be implemented that are far more sustainable. It may be that this particular person can still travel on a regular basis because they need to see that the customer, but maybe they could just do things maybe a bit smarter. Rather than going to visit the one customer when traveling internationally, let's say they're traveling over to Europe, why don't they travel to take a short-haul flight and go and see another customer within Europe at the same time. And then they're reducing their overall long- haul emissions, if you like. Or they may be able to take travel within Europe by rail to go and see another customer.

I think there are many different ways that they can look at it, but make the trip more worthwhile. Go and see more than one customer or supplier or whatever it may be. Just trying to get more out of that. And then for those one day trips or anything like that, then I'm sure they could be changed to a virtual meeting in some cases if it's only a short trip. But if it can't then just try and focus on more sustainable methods of travel. Whether or not it's rail or using an electric vehicle, for example, electric cars, or a hybrid vehicle. Just think about different ways of how you can reduce that impact.

Ryan Hamilton:

That makes a lot of sense. It sounds like if we really boil it down, the idea is that the question, "What do I have to give up in order to be more sustainable?" is an outdated question. It should be, "What can I do a little bit differently so that I can be more sustainable without giving anything up?"

Sally Crotty:

Absolutely. Yeah. I would completely agree with that. We don't have to stop traveling. I've been in the industry, like I said, over 30 years. I don't want to see people not travel. It's more about, let's just do it in a smarter way.

Ryan Hamilton:

Thanks again for joining us, everyone. Today was the second of our two-part series on sustainability. We talked about what it's like to start to act on a framework for improving our footprint in sustainability in businesses. To learn more about what sustainability is from a high level, what it means to corporations and what a long-term roadmap might look like, please listen to our other episode released prior to this one. Well, Sally Crotty, thank you so much for your time. We really appreciate it and your expertise. We'll include contact information in the notes in case anyone has any follow-up questions or is interested in chatting with you, but I appreciate your time today.

Sally Crotty:

Thank you. Thanks very much, Ryan. It's been great talking to you today.

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Based in the UK, Sally does work on a global basis with some clients however has particular focus on the EMEA region. Starting out in the Corporate Travel sector over 30 years ago, she has vast experience and held senior positions in Travel Management both operationally and from a sales and account management perspective, she has 5 years¡¯ experience in the hotel industry and 2 years in GDS/Online Booking Tools.

Sally lives with her husband, 2 sons, 2 dogs and a cat in Cheshire, England, her passion for sustainability has increased over the last few years focusing on sustainable initiatives in travel and the total cost of ownership in managing sustainable travel and expense programs. In her personal life Sally has recently made the decision to move to driving a fully electric vehicle with the goal of reducing her own impact on the planet!

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