Tony D'Astolfo: Hi, and welcome to Zeno Live, the new live video series from travel, booking and expense management provider Serko, where we feature subject matter experts and various topics across the corporate travel industry. I'm Tony D'Astolfo, and today I'm joined by James Moulder, co-founder and executive director at TEM, Tasman Environmental Markets. Now, James, thanks for joining me.
James Moulder: It's a pleasure.
Tony D'Astolfo: This is a hot topic, a lot of conversation. So James, but before we get started and diving in, give me a quick overview of what TEM is, and what it can provide specifically as it relates to business travel.
James Moulder: Yeah. Thanks, Tony, and thanks for having us. TEM was established in 2014 in Australia as a carbon development business, that was helping corporate clients meet some of their environmental goals and targets, so we set ourselves up as a business dealing mainly with some of the large airlines in this part of the world, most notably Qantas, where we helped them on their sustainability journey by providing offset products and services into the travel industry, so that was sort of the genesis for our business. And over time, it's developed into a technology business, which really provides the technology for travel businesses to consider, reduce, and then offset the emissions that they've caused as a result of their travel activity, so that's kind of who TEM is. We're a team based in Melbourne and Sydney in Australia, with a small team in Auckland, New Zealand.
Tony D'Astolfo: Great. Thanks for that. Now you guys have been at it since I think you said 2014.The conversation's been around for a long time and we've seen some glimmers of activity, particularly in travel. It's gotten a lot more heated up lately, so what do you think is different today, James? What has changed?
James Moulder: That's a really good question and something that we are seeing, I guess, is not coming from one sector. Companies' customers are asking what they're doing around sustainability, companies' investors are asking what they're doing around sustainability, staff are asking what's being done around sustainability, so it's coming from all angles and we're maybe five, six years ago, somebody may do some carbon offsetting or do some sustainability initiatives with staff, post it on LinkedIn or on a social media channel. It's kind of morphed where companies are now being asked to make specific targets and specific reductions, which are measurable and auditable and verifiable, so we've gone from a sort of nice-to-have PR-type thing into a set of frameworks where businesses are being held to account for a lot of their reduction activities, and obviously in the travel industry, a lot of those reductions are quite hard, because there aren't too many alternatives or substitutes for travel in some cases. That's why there's a lot of scrutiny on travel, and that's why we think some of the tools that we've developed can help people in that regard.
Tony D'Astolfo: Now, what specifically are they measuring or recording today?
James Moulder: Primarily carbon emission. There are some businesses that go a little bit further than that and measure some other environmental impacts, but primarily they're trying to measure the carbon that's been emitted as a result of the travel activity. So whether it be emissions out the back of the jet engine while you fly across the United States, whether it's the rental car that you drove between LAX and downtown Los Angeles, or whether it's the ship that traveled between Florida and somewhere nice and warm in the Caribbean, people are wanting accurate calculations for the emissions intensity of that trip so that, A., they can report it; and second of all, if they can't reduce it, that they offset what they haven't been able to reduce, and that way, they can actually start to create a narrative and start to put into their reporting, 'Hey, look, we're taking this seriously. We're measuring what we are doing. We're making choices to reflect the fact that we want to reduce our emissions and for where we haven't been able to do that, we have offset.'
Tony D'Astolfo: Now, who typically is funding this — this is a travel audience, right? And so I would assume, though that this is probably getting some visibility in the C-suite, right? There's broader initiatives that go beyond travel — sustainable buildings, sustainable getting to work — so who do you see? Is there a chief sustainability officer? Have we gone that far, or where would this sit?
James Moulder: So, we do see, like Qantas, has got a chief sustainability officer, and that's a C-suite executive reporting to directly to the chief executive, so those sort of roles do exist now. In addition to that, we deal with CFOs because there's an investor angle. Investors are starting to become more agitated about climate action and what's being done, so quite often we'll see CEOs engaging with CFOs around what's being done. In addition, we see quite often the marketing teams getting involved because it's a customer proposition that they want to position in-market, which is sustainable, so it depends really on where the impetus is coming from within the organization, but it is percolating to the C-suite, and quite often it's the CEO that's actually driving it because he's, or she, they've got a view right across the organization as to where the pressure is coming and they're feeling it in all respects, and it's leading a lot of businesses — and a lot in the United States too — to start to make commitments publicly.
So, some of your largest corporates, PepsiCo's a good example: Last year, they doubled-down on their science-based targets and made a commitment that they would reduce their Scope 3 emissions, which includes travel and transport by 40 percent by 2030, from 2015 levels, so these are things that now have to be measured, and they need to be reduced, and where they can't be reduced, they need to be offset. So these have transitioned, as I sort of said before, from nice-to-haves now to must-have commitments, which now need a rigor around them to show how they've been calculated and show how the reductions are occurring.
Tony D'Astolfo: Yeah. So, (a) publicly-traded company makes a statement to shareholders, to (their) industry, to their own folks that they're going to change something about their business, and specifically in the case of PepsiCo as you just said, they're going to reduce their carbon by X. That's measurable.
James Moulder: Yeah, that's right. That's not just X; it's X by Y based on—
Tony D'Astolfo: Got it. So yes, by a certain date. OK, OK.
James Moulder: So, I think that's one of the big changes that we've started to see, where people are actually putting frameworks together, whether it be the task force for sustainable development, even the accounting standard boards all around the world are starting to come up with methodologies around how people need to report their sustainability activities and their carbon reductions, right through to the science-based target initiatives that people like PepsiCo in the US are using. So the frameworks that people are starting to apply are becoming more advanced and moving from, 'Tell us about your broad strategy,' to 'What are you actually doing by when, and how are you measuring it?,' so that's been a big shift, I think, Tony, in the last year or so, particularly since the Glasgow COP meeting late last year, where the whole carbon market and the role of corporates in making reductions alongside governments really got a big kick along.
Tony D'Astolfo: OK, so we have a framework and then we have a set of goals that are measurable, reportable, within a specific timeline. So, that speaks to real commitment. So the next question is, particularly as it relates to business travel, the knee-jerk reaction might be, just don't travel or travel less, right? — which I've seen and heard people say, right? I don't know that we can go to that extreme without having dramatic impacts on a company's performance, let's just say. So, what are they doing? What are they doing like specifically, right at the point-of-decision, I'm going to book a trip. What do you see people doing?
James Moulder: Yeah. The first thing I think they're starting to do is actually starting to measure the emissions that they're taking, so the first thing is actually just being aware of, 'Oh, gee, I didn't realize that was going to emit one-and-a-half tons of CO2 into the atmosphere by me just doing this particular trip,' so I think that's the first thing. The second thing is, is that a lot of the tools now, including our BlueHalo product, are starting to give you choices, so if you fly across the United States in a relatively old 757, the difference in emissions between you doing that and flying in an ultra-modern 777 is tens of a percent different. So the way in which you fly and the routes that you travel, it may be a little bit cheaper to route through a particular hub, but it's in a carbon center flying a lot longer on a much older aircraft. All of a sudden those sort of choices become able to be made, and trade-offs made; or even just saying, 'I'm actually going to catch the train from Boston to New York rather than flying because the emissions associated with that rail trip on the Acela are much smaller than if I fly into LaGuardia.'
Tony D'Astolfo: Well, shameless plug because we've integrated the BlueHalo product into Zeno, and what we always try to do is, right at the point-of-decision, what we call the 'point-of-purchase,' to give people as much information as possible — and it's no longer, 'How long does the trip take? How much does the trip cost?'; It's now, 'How much carbon am I emitting?' — because, as you just suggested, there are differences, right?
James Moulder: Big differences, yeah.
Tony D'Astolfo: Now have you worked directly with companies, and I assume you are working directly with companies, and so take somebody like PepsiCo — this would be part of an overall approach that they would take, right? 'Fit it into the framework, let's see how much our business travel is doing, and then let's see what we can do about it.' Is that kind of the way it works out?
James Moulder: Yeah, it is. And also just putting the information in front of the person that's making the booking so they can actually see line items. You're presented with three particular choices when you're flying to Atlanta, and the carbon intensity of each of those trips are starting to be listed out by carrier or by aircraft or by service or by time, so all of a sudden, some of this stuff puts the staff member in a position where they can actually do something, which a lot of staff are looking for. But in addition to that, if the company has a comprehensive offset program associated with that travel, the customer or the staff member knows that the trip's actually going to get offset regardless of whether or not, or what happens, so they're doing the right thing, but what they can't avoid gets offsetted and it gets captured and reported and tracked so that managers are able to look at their progress against their targets over time.
Tony D'Astolfo: So, what practical advice would you give a travel buyer? We have a lot of travel buyers. We have a lot of travel management companies. We're all in the business of managing travel. We're assuming it's going to continue to happen, and it's part of the dilemma, so to speak, so (what are) practical recommendations for somebody that's that's in that position?
James Moulder: First thing, really, I think is presenting the information in a form where people can actually make choices and actions. That'd be one of the first things. Second thing is making sure that the calculations are valid, because in quite a lot of cases, those trade-offs — if you use somebody who's got a spreadsheet somewhere, or it's not a very robust process — the trade-offs aren't that apparent. And thirdly, around the calculations, making sure that if you're a US business, making sure that you're applying a standard, which is applicable to your own environment. The US EPA, for example, publish emissions factors, as does the Canadian government, as does the UK government, and so on — so different jurisdictions have different approaches to how they want to see some of the stuff reported. The other piece of it is making sure that you match up your own narrative and your own desires into the carbon calculation for you, because it isn't like a T-shirt, one size fits most.
It is actually a little bit more bespoke than that, and we see a lot of companies making decisions around how they want to look at carbon, which are quite different from others. We've got some companies, for example, that say, 'Look, we want to include the emissions associated with extracting the oil out of an oil field somewhere in another part of the world and transporting it to the side of the aircraft before it gets loaded.' Other companies say, 'Look, we also want to include the effects of putting jet fuel into the atmosphere at 10,000 meters, or 30,000 feet, because the impact is different, so we want to include that as well,' so the way in which you bootstrap up that calculation is very particular to the particular company and the standards that they're setting themselves up for, and even their own strategy and views on whether they should be taking an account of that or not. It is a little bit of a horses for courses, as we say Down Under, type challenge, but the good thing is that a lot of the tools that BlueHalo provides makes that a pretty easy set of configuration options for you, depending on what you want to do and how you want to do it.
Tony D'Astolfo: So, configurable to the client, based on what they want to do. A question — one last thing — before I let this part go: sustainable aviation fuel, is something I've heard a lot of conversation about. Is that something you can accommodate? And is it something you think is going to have an impact?
James Moulder: Yes, it is, and we are working on our set for sustainable aviation fuel product at the moment. It's pretty early days for it. One of the hallmarks of the BlueHalo environment is, we've got very, very high levels of integrity around the registries and projects and the calculations and everything else. The markets around sustainable aviation fuel are still being developed to the frameworks of the industry, making sure that when somebody said that they did something that it actually got done. If we look back in some environmental markets over the last 10 years, when they got up and running, there wasn't quite as much rigor with that. Reputationally, we think it's important that, whatever is deployed is absolutely beyond reproach, so watch this space around SAF. It will come and it is coming and we are working on it. It's not quite there yet.
Tony D'Astolfo: Good to hear. Thank you very much. Fascinating. We could go probably for another half-hour, but Zeno Live is only intended to be about 15, 20 minutes, so if it's OK with you, as I normally do to close these things out, I'm moving into a place we call the 'Zeno Zone,' where I ask you a couple of quick-hit questions to give our audience a little bit more familiarity with James — so you ready to go?
James Moulder: Yeah, fire away.
Tony D'Astolfo: Here we go. You have a major business decision to make, and you can call anyone — who gets your call?
James Moulder: It would probably — well, assuming that they can be alive or dead — I would probably call Thomas Edison, actually. I've always been a person that's a little bit of a contrarian, and innovation has always been my thing, so it would probably be somebody like Thomas Edison, because business is about marching things forward, in my view, and innovation is really, really close to my heart, so I'd choose someone like Thomas Edison.
Tony D'Astolfo: All right, I'll take that. Have some fun now: You have dinner for four, so you can invite three guests — again, anybody, any period of time, dead or alive — who's at James' table?
James Moulder: It would be Elvis, would be the first person, of course.
Tony D'Astolfo: I love it.
James Moulder: As long as he's not working a shift at a Walmart somewhere in the Midwest, I think it would be great to have Elvis. I'd probably also include Steve Jobs, because I'd love to know what he would've done after the iPad if he hadn't sadly passed away. And the last one would be Johnny Mack, John McEnroe, the tennis player, a tennis treasure. I grew up watching in the middle of the night, as it was for us watching (in Australia), Lendl-McEnroe, Borg-McEnroe, so I'd love (it) and it would be quite a lot of fun — I'd love to sit down to Johnny Mac.
Tony D'Astolfo: That would be fun. Have you ever been to Graceland? I'm a big Elvis fan.
James Moulder: I have, yeah. I went there in 2017 and I even have my own version of the jungle room at home, so I'm a fan.
Tony D'Astolfo: You've taken it to another level. See, this is why we ask these questions. This is why we ask these questions. OK, that's good stuff. All right, you got your party of four — are you guys in a dive bar or you fine dining?
James Moulder: Oh, it's definitely a dive bar. I wouldn't take John McEnroe to a fancy restaurant.
Tony D'Astolfo: You might get thrown out, and no matter where you went, Elvis would order the peanut butter and bacon sandwich, so you're probably going to need a dive bar. All right, last question: Give me a prediction. We always do this. Give me a prediction (of) something you think is going to happen within our industry within the next 12 to 18 months, James.
James Moulder: I think you're going to see this continuation of this massive change around sustainability and travel. I mean, I know this is a bit boring getting back to the business topic, but we just see exponential growth as companies become much more attuned to the impact that they're having on the environment, whether it be in their buildings and power supplies and everything else, but right the way through to travel, and a lot of the time it's the staff that are pushing this. Customers, investors, yes — but a lot of people, a lot want to work for businesses which take the stuff seriously, so it's a pretty easy call for us because we see it every day. But we predict over the next 12 months that the list of companies, particularly US companies, on that sustainable or science-based, target sustainable list will grow exponentially from here.
Tony D'Astolfo: Well-said, I don't disagree. So, that's it, James. I want to thank you, James, for joining us today. I would also like to thank those of you who joined live and hope you'll join us again on our next installment of Zeno Live. Until that time, this is Tony D signing off.
James Moulder: Thanks Tony.
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