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Joel Makower: Nora, as we look into the post-COVID era, what's the take on sustainability from the business side these days?

Nora Lovell Marchant: There's a growing recognition by investors specifically, and stakeholders generally, that ESG (environmental, social, and governance issues) is top of mind on corporate agendas. That's because there's a growing recognition amongst boards and all stakeholders that ESG generates value. And that means mitigating risk, creating opportunities, increasing competitive advantage and making companies more resilient for the future, so that they can protect against future existential and systemic crises like coronavirus, and more looking ahead, climate change as well.

JM: I would imagine that all of this is changing how corporate procurement of travel services is being handled. How are you working differently now with companies?

NLM: There has been a huge, accelerated focus on procuring green. And that means partnering with suppliers who can provide you with the sustainability solutions that you need in order to meet your objectives. We've even seen a willingness to pay for these green premiums that are being applied to these products and services. For every other financial metric of the organization, you would choose to partner with suppliers that can meet your objectives. Environmental sustainability is no different. On the procurement side, companies have a decision, and that's either to divest or to engage. If you have a supplier that is helping you to meet your corporate objectives, then they can remain a supplier. And if you have a supplier that is not helping you to meet your corporate objectives, you have a decision to make, and that's either divestment or build capacity. And I think that's a perfectly rational decision for procurement professionals these days to say, "I don't have time for this,鈥� and to just choose those suppliers that are going to help us reach our net zero targets in the quickest manner possible.

JM: Are you seeing a lot greater demand for transparency by travel buyers from their travel partners?

NLM: Yes, absolutely. I think that carbon transparency is top of mind for procurement professionals. And that's because 30% of Fortune 500 companies have set a carbon goal by 2030. And if that trend continues, that could be as high as 80%. So procurement professionals need to align their corporate objectives with the climate goals that their company has set, whether that's net-zero or carbon neutral, or RE100, which is 100% procurement of renewable energy. These targets are part of business decisions and capital allocation decisions that are being made today.

Our clients are increasingly demanding more carbon transparency through some of the more precise methodologies like [that of] ICAO (International Civil Aviation Organization) or proprietary methodologies that take into account aircraft type, or load factors, or seating configuration. I would encourage corporations to think big picture and to think about the theory of change. Because shuffling a couple of business travelers from one airline to another, on a particular route, that's probably imperceptible to the airline at a macro level. That's not going to make them change their fleet replacement cycles, and it's not going to make them change their behavior. What is required is open and explicit collaboration with your value-chain partners. I would encourage corporates to make this a consideration when you are signing your long-term supplier deals, to make environmental sustainability part of the contractual negotiation.

JM: As a global travel partner, what actions or strategies do you advise airlines to take to help make business travel more sustainable for their customers?

NLM: At American Express Global Business Travel, it is our job to help our customers travel in the most sustainable manner possible. And there are several different levers that can be pulled in order to help that happen. There are basically five pillars to creating a sustainable travel program.

The first would be track and report. Track and report means establishing a baseline and then tracking against that baseline.

The second would be influenced choice. That means shifting traveler demand to the most sustainable option possible. And that can be done in a variety of ways like supplier selection or modality shift, for example, from air to rail, when that's an option.

And then the third pillar would be to procure green. A company has power with their procurement and with their strategic sourcing, and selecting suppliers that have your corporate sustainability goals in mind is absolutely critical.

The fourth pillar would be to promote offsets. Carbon offsets are a critical transitional tool to the future and a bridge to the future when we have decarbonization options.

And then the fifth would be driving towards net-zero, when we have those technological breakthroughs, which could include, for example, sustainable aviation fuel (SAF), or net-zero propulsion aircraft, or carbon capture and storage. So, there's a lot of ways that we can get to net-zero in the future.

JM: Most of that's on the demand side, the business traveler. What about on the supply side? What's the role of airlines right now? What can they be doing to help create this more sustainable travel market?

NLM: Well, I think with respect to airlines, you really need to start at the top. And the top framework would be CORSIA, and that's the Carbon Offsetting Reduction Scheme for International Aviation. CORSIA is really significant in a lot of ways and has a lot of promise because CORSIA is actually the first global carbon pricing mechanism that covers an entire sector. We're already seeing increased liquidity in the carbon markets because of CORSIA. S&P Platts, for example, has just published a benchmarking pricing index with respect to CORSIA-eligible carbon credits. And that has already, in very short order, had a huge impact on the carbon-offsetting market. So, it's really exciting to see where this space will grow further.

JM: What about airlines that want to go beyond CORSIA to be seen as true leaders, what can they be doing right now?

NLM: I think there's a growing recognition amongst airlines that the standards set by CORSIA are perhaps not ambitious enough. And similarly, the goals that have been set by IATA, the International Air Transport Association, are not aggressive enough. IATA has set three main goals: To improve fuel efficiency 1.5% annually, to be carbon neutral from 2020 onwards, and then third would be to reduce emissions 50% by 2050. This, however, is not ambitious enough to meet the commitments of the Paris Agreement, which requires 50% reductions by 2030, and then net-zero by 2050.

NLM: There are airlines that are going above and beyond and doing more to decarbonize aviation at a faster pace. And there are some true leaders in this regard. So, for example, Delta Airlines has just come out with pretty exciting press release recently that they have partnered with Deloitte with respect to decarbonization using sustainable aviation fuels. American Airlines is another airline who was going above and beyond. They announced [at the time] a record-breaking purchase of sustainable aviation fuels from Neste. Similarly, United Airlines has been a long-time leader in the United States in this regard. And they announced a 10-million-gallon purchase of sustainable aviation fuels from World Energy. In Europe you have KLM in partnership with the SkyNRG Board Now program, really doubling down on sustainable aviation fuels. And in our emerging markets, Singapore has been a true leader in this regard, really focusing on sustainable aviation fuels. So, airlines are recognizing that they cannot meet their own industry targets without seismic changes, and that means technical breakthroughs, and that means SAF.

JM: That also means partnerships. All of the initiatives you just described are partnerships between airlines and others, mostly corporations. What can organizations like American Express Global Business Travel do to facilitate more of those kinds of partnerships?

NLM: That's a really critical question as to how industry actors can build coalitions to drive industry-level change. I'd like to highlight what's happening in the automotive sector. There's an initiative among 10 of our clients called Drive Plus. Companies that you would typically view as competitors are actually working together to create a circular and more sustainable value chain in the automotive sector. So, I think that we can borrow from that sector with respect to aviation. And there needs to be a consortium amongst not only the airlines themselves, but users of aviation services, to help the aviation sector decarbonize.

JM: When it comes to sustainable aviation fuels, on one hand, we talk about it as the fuel of the future. On the other hand, we're saying it's here and now. What is the state of the market today?

NLM: The state of the market today is significantly underdeveloped. Today, SAF constitutes 0.1% of global aviation fuel. And that is insufficient to decarbonize aviation. What we need to do is scale SAF, so that we can capture those carbon-emissions reductions on a lifecycle basis of up to 80%. And there are some real pioneers in this space. Delta, for example, is the first to admit that all of the SAF in the world today could only power their flights for less than one day. They're transparent about that. And if you scale that to the entire global fleet, all the SAF in the world today would be insufficient to power the global fleet for an hour. So, we really need a breakthrough in scaling SAF for this to be a solution for the future.

JM: When you talk about sustainable aviation fuel, shouldn't it be the airlines to take the lead on that? Why should corporations have to play a role?

NLM: There's the scientific answer, which is that under the Greenhouse Gas Protocol, there is an inherent and deliberate sharing of emissions across scopes. And that means that the Scope 1 emissions of an airline are the Scope 3 emissions of the users of aviation services. So, there is an inherent ability for airlines and corporations to share the savings of those emissions associated with sustainable aviation fuel.

And then there's also the practical answer. And that is, if nothing changes, then nothing changes. The first SAF flight was flown in 2008, that was 13 years ago. And today, SAF still constitutes less than 0.1% of global fuel distribution. In order to scale production, there needs to be clear demand signals. And yes, the airlines are the entities that ultimately purchase and use SAF, but there's also an opportunity for corporations to drive sustainability in the aviation sector by helping to co-invest with SAF.

There is a supply problem because there is a demand problem. And there are not currently clear demand signals that are sending the right messages to producers to make more SAF. So, there needs to be an unlocking of those investors that are sitting on the sidelines. And those investors could be corporations who are flying their employees around the world on these airlines. So, there's a real opportunity here for corporations to help break this chicken-and-egg issue that is blocking SAF from scaling to its full potential.

JM: It sounds like there's a lot more going on behind the scenes than most people know about. Should the public be better informed about all these potential alternatives to aviation propulsion?

NLM: Absolutely. I think that there's a growing recognition that sustainable aviation fuel is available today. But I don't think that the public or even corporations understand that over 250,000 flights have been commercially flown on SAF already. This is not some futuristic solution, some Star Wars possibility. This is happening today. This is being injected into over six airports today, more tomorrow, on a regular basis. SAF is happening. It's a true drop-in fuel. It's entirely fungible, replaceable with Jet A fuel. And I think that consumers would be excited if they knew more about SAF and that the airplanes that they were flying on included SAF. So, I think there's a real potential there for the public and consumers 麻豆传媒 and to be excited about the space.

JM: When we think about what it will take to make aviation sustainable, do we really need disruptive breakthroughs? Why can't we just continue the efficiency improvements that airlines have always made?

NLM: Aviation accounts for 2% to 3% of emissions on a global basis. While that might sound like a modest number, prior to COVID, aviation was actually the fastest-growing sector in terms of contributing to global carbon emissions. So, by 2050, aviation could constitute up to 22% of the global carbon budget. Even though aviation is considered a hard-to-abate sector, that doesn't mean they get a free pass from decarbonization. In fact, it means the opposite. It means that it will be more expensive and more technically challenging for aviation to decarbonize compared to other sectors.

The reason that we need breakthrough technologies like sustainable aviation fuels or next-generation propulsion or carbon capture and storage, is because the aviation industry has an emissions trajectory challenge. What does that mean? On an annual basis through 2050, the aviation industry is expected to grow 2.9%. And that's even taking into account the effects of COVID. And on an annual basis, aviation has successfully accomplished about 1.5% to 2% fuel efficiency or reduced greenhouse-gas intensity. But that 1% delta means that aviation emissions are going to go up. And that is inconsistent with the aviation industry's own goals of reducing emissions 50% by 2050. And it's certainly not ambitious enough to hit the Paris targets of net-zero by 2050. So, in order for aviation to decarbonize, there needs to be breakthrough technologies.

JM: What are the conversations you're having with your corporate customers about the need to make aviation more sustainable?

NLM: Corporates are hyper-focused on environmental sustainability. And very recently there's been a huge acceleration in the focus on environmental sustainability. I'd like to highlight one stat that I find really compelling. In 2020, the number of companies reporting to the Carbon Disclosure Project actually increased by 14%. The Carbon Disclosure Project is the global standard in terms of carbon transparency and reporting. And CDP covers 50% of global market capitalization. There's now almost 10,000 companies reporting to CDP. To have a 14% increase in 2020 at the height of coronavirus shows a real commitment by corporations to carbon transparency.

There has been a huge uptake in the demand for green products and services. As corporations seek to decarbonize and pursue the carbon targets that they have set, Scope 3 or their value-chain emissions constitute a majority of their emissions. So, in order for companies to decarbonize, they need to focus on employee business travel. And they are turning to their travel-management company for solutions as to how they can decarbonize business travel.

JM: Talk a little bit about the solution set that you offer at American Express Global Business Travel to help your corporate travel customers decarbonize their travel.

NLM: We have a comprehensive suite of sustainability-focused products and services to help our corporate customers decarbonize and reduce their travel footprint. That includes tracking and reporting. We have a variety of carbon-calculation methodologies that we offer to our customers, so that they can report under US EPA (Environmental Protection Agency), 麻豆传媒 DEFRA (Department for Environment, Food, & Rural Affairs), or ICAO (International Civil Aviation Organization) calculation methodologies, or even our own proprietary calculation. That helps companies measure and report their carbon, and what gets measured is what gets mitigated.

We also have solutions at the point of sale to help travelers pick the most sustainable option. So, travelers can visibly see the carbon emissions that are associated with their trip, and then choose their trip based upon those carbon emissions. Point-of-sale solutions are incredibly important and we're seeing an increased demand from our customers for that.

Additionally, carbon offsetting, while not a complete solution, is absolutely critical to corporate strategies as part of their decarbonization strategies. And then looking to the future and driving towards net-zero aviation, I think that sustainable aviation fuels will constitute a growing portion of the options to decarbonize.

JM: What is your experience in offering carbon offsets to customers in terms of their response and how they see that as part of the solution?

NLM: Carbon offsetting is met with a certain degree of skepticism by customers. But there's a growing awareness and recognition of the importance of carbon offsetting when it is used correctly. Under the science-based target initiative, there is something called a mitigation hierarchy. And that means, first you avoid carbon emissions, [then] you reduce carbon emissions, and then you offset what remains. So, offsets act as a compensation or a neutralization measure, but they cannot substitute for reduction of emissions. As long as offsets are used properly, they are absolutely a critical strategy for corporations as part of their overall decarbonization strategy.

JM: Why not just stop traveling altogether? I mean, the greenest trip is the one you never have to take. We've been Zooming, and Skyping, and meeting and hanging out all these months. Why not just stick with that?

NLM: At American Express Global Business Travel, we truly believe that travel is a force for good. Travel has an unparalleled opportunity to open minds and to create cross-cultural communication, and to create a shared sense of humanity. Our species has a need to gather together to explore and to discover. And I really do think that travel is the story of human history. I don't necessarily think that's going to change because of coronavirus. Travel is stubbornly resilient, and that includes business travel.

If you look at a graph of travel over history you can see, for example, the oil shocks in the 鈥�70s and 鈥�80s, and then travel rebounds. Or travel rebounding after 9/11. COVID-19 is not the first coronavirus to impact our global economy. There was the SARS virus. And then the volcanic eruptions in Iceland. And then the global financial crisis in 2007. And every time travel rebounds.

I think that for a period of time, you will see a shift from globalization to de-globalization, or you will see a degree of near-shoring instead of offshoring, or insourcing instead of outsourcing, because people want to control the resiliency of their supply chains. But eventually these forces are going to reach equilibrium. And corporations are going to want to continue to grow their bottom line. And that means continuing to have business travel, but doing it in a more sustainable manner.

You also have to think about the emerging markets because that is where the growth is going to happen. It is a truism in aviation that air-traffic growth is closely linked with economic growth and closely correlated with GDP. I'm often asked, what is the profile of the business traveler of tomorrow? And the answer is, emerging markets. According to Boeing, only 20% of the world's population has ever flown on an airplane before. That means 80% of the world's population has never had that opportunity to [fly]. And we need to think not just about our own corporate targets, our own corporate footprint, but making aviation sustainable, so that everyone has the opportunity to travel.

JM: As those higher up inside companies are focusing on this, are they asking different questions or taking different approaches to this, beyond things that used to drive the conversation, like costs?

NLM: Absolutely. I think that as we chart a path for the future and as the travel sector rebounds, there's going to be an increased focus on traveler wellbeing, and there's going to be a cost-benefit analysis with respect to every trip that is taken. And that's going to have a financial component and also a carbon component. In the past, corporate travel was very much focused on cost containment. And lowest logical fare was the currency, I guess you could say. Now there's a shift towards lowest logical impact or lowest logical carbon. Corporations want to ensure that the trips that their employees are taking are the most sustainable trips possible.

JM: If I'm the head of travel buying at a large corporation, this all sounds really complicated. There are so many different players -- the airlines, the aircraft manufacturers, the airports, the fuel companies, the travel-service companies. What's one thing that I can do that would push the market more towards sustainable solutions?

NLM: The one thing that travel buyers can do is to take action today while planning for tomorrow. That means purchasing offsets today, because you can take your company carbon neutral today. And also plan for the future by investing in sustainable aviation fuel. Because SAF has the potential to reduce carbon life-cycle emissions by up to 80%. And that is the answer to aviation sector-wide decarbonization. We need to take big, bold moves today. Make the decisions that are going to make a meaningful change with respect to climate change. That means betting on the future. That means seismic changes like sustainable aviation fuels, like zero-propulsion aircraft powered by hydrogen or electric technology, investing in carbon capture and storage technologies, and also investing in carbon offsets today, because carbon offsets can catalyze climate finance for the future.

JM: Thanks so much, Nora.

NLM: Thank you, Joel.