Accounting for Business Travel – Flights

February 1, 2024
8 Minutes
Photo by Ross Parmly

When it comes to accounting for the emissions from business travel, you might feel like some companies have their heads in the clouds. In this article we are going to explore some of the key concepts underpinning the GHG accounting for business travel-related emissions.

Why are emissions from aviation important?

According to the International Energy Agency (IEA), aviation accounts for 2% of global greenhouse gas emissions. This may not sound like much but aviation is one of the more difficult sectors to decarbonise, so overtime flights will become an increasingly large portion of emissions. Without a change in technology or consumer behaviour, air travel could have an impact on your company's ability to reach net zero.

For some companies, especially service-based organisations, emissions from flights can be one of the more significant sources of emissions and can often account for more than 20% of an organisation's overall footprint.

How do businesses account for air travel emissions?

Passenger air travel is accounted for under the Scope 3 category “Business Travel” under the GHG Protocol. The Technical Guidance for Calculating Scope 3 Emissions states that: 

“A reporting company’s scope 3 emissions from business travel include the scope 1 and scope 2 emissions of transportation companies (e.g., airlines).

The guidance here puts the emphasis on the emissions resulting from the fuel and electricity used to power the specific vehicle used by the business traveller (more on the ambiguity of this later). The guidance then goes on to outline the three methods available under in the GHG Protocol: 

  • Fuel-based method Here the organisation needs to quantify the fuel or electricity consumption from the trip, apportion this to the individual passenger and then calculate the emissions based on a conversion of the quantity of fuel into an equivalent amount of CO2 using a representative emissions factor.
  • Distance-based method – Here the distance and the mode of transport are known and this information is used to calculate the emissions from the trip based on a representative distance based emissions factor (often an average from the UK Government).
  • Spend-based method – Similar to some of the other Scope 3 categories, as a last resort, where other information just isn’t available, the business can use spend to determine the emissions associated with a given trip. This method is very uncertain, especially given the price of airfares can fluctuate wildly from day to day. If you are using spend, it is one of those categories where you should be aiming for better activity data.

Often it is impractical to collect the data for the fuel-based method for individual trips. As such, most of the corporate reporting of passenger travel converges around the distance-based method.

Calculating emissions using the distance-based method

The formula under the distance based method is:

Emissions = Distance Travelled (km/miles) x Emissions Factor

In order to calculate emissions under the distance-based method we need three things:

1. The mode or type of transport, which might be characterised by:

  • The type of aircraft
  • The seat class
  • Distance that is being covered (i.e short-haul vs long-haul)

2. The distance travelled, either this will be available via a travel listing or it will need to be calculated using the departure and arrival locations.

3. The emissions factor, which is the magic number to convert the activity (distance travelled) into an equivalent amount of emissions.

Your invoice may provide some of this data but you will still need the relevant emissions factor to use which Sumday enables you to easily select.

Where do flight emissions factors come from?

Most of the time emissions factors will vary depending on the location of the company reporting emissions, however in the context of passenger air travel most governments rely on a single set of factors published by the UK government.

Summary of Passenger Air Travel Guidance by Country

If you want to go a bit further down the rabbit hole, the UK government publishes a methodology paper to accompany their emissions factors which outlines the overall approach adopted to come up with these factors.

To give you a bit of a sense for how these factors have been built up, here are some of the key data points used in creating each of the factors.

  • Fuel economy by plane model
  • Number of planes by model type
  • How full the plane is
  • The split between cargo and passengers
  • The allocation of emissions between first, business and economy passengers

These drivers can vary greatly by individual flight, carrier, or route and as such the averages might not be reflective of a specific flight’s carbon emissions. It is also worth noting that there is a lag in the underlying data used to calculate some of these factors, for instance the UK government’s 2023 flight emissions factors are calculated based on 2020 seat occupancy rates which might not reflect the reality of a post covid world.

What components are included in the emissions factors?

The GHG Protocol does not provide guidance on the specific boundary of air travel emissions, only noting that it covers Scope 1 and 2 of the transport providers. As a result, flight emissions factors are often published in several components and users can apply judgement or use regionally specific guidance to determine what is included. The key components typically covered are outlined below:

  • Well-to-tank (WTT) emissions, these emissions relate to the extraction, production and transport of the fuel source used to power the flight. If the plane is using conventional aviation fuel this category would include the extraction and refining of oil and getting the fuel to the plane.
  • Tank-to-wake (TTW) emissions, these are the direct emissions as a result of the combustion or consumption of the fuel during the trip and typically account for the majority of the overall emissions. The TTW emissions will vary depending on the fuel source.
  • Radiative Forcing Factor, this one is a bit more technical and is designed to capture the impact of flying on the earth’s energy balance. Factors such as the production of contrails, release of aerosols and high-altitude emissions can impact the warming resulting from flight emissions. Although there is some uncertainty around these impacts many sources include an adjustment factor from the base TTW emissions to account for this factor.

As part of the preparation of your GHG inventory, disclosing if these factors have been included within the emissions factors applied can help stakeholders interpret the final results of the inventory.

Ambiguity and the evolving accounting considerations for air travel emissions

The GHG Protocol’s guidance on air travel is not particularly prescriptive when it comes to air travel. This currently creates a certain amount of judgement when interpreting the standards and incorporating them into your GHG Inventory. There are three emerging areas to be aware of that might affect how organisations are disclosing their flight emissions. These are:

  1. The treatment of WTT emissions
  2. Accounting for non-fuel related flight emissions
  3. Accounting for the use of the purchase of Sustainable Aviation Fuels (SAF).
WTT emissions

Under the GHG Protocol, accounting for WTT emissions from flights are optional, creating some inconsistencies in relation to flight related emissions. Other leading organisations such as the Science Based Targets Initiative (SBTi) have published guidance covering the aviation industry requiring that WTT emissions are included in SBTi targets. There is a good chance that the GHG Protocol will follow suit in revising its guidance but until then, organisations should include details of the approach adopted in their GHG Inventory.

Non-Fuel Related Flight Emissions

In other GHG categories such as purchased goods and services, organisations are required to incorporate the Cradle-to-Gate emissions of their suppliers. This means all of the inputs associated with providing goods or services. For example, if you are buying a coffee from a café not only do you need to take into account the ingredients in the coffee, but also the packaging and a portion of emissions of running the café (Electricity for the coffee machine and lights, the freight of the beans, etc). 

The standards currently don’t apply a consistent approach for air travel, there is nowhere in your inventory that accounts for the food and beverages or packaging used on the flight of the airlines broader operations and decarbonisation efforts.

By excluding non-fuel emissions from the GHG accounting, the airlines have less incentive to collaborate with their supply chains and innovate with their operations. Although they still may need to disclose these emissions as part of their annual report, supply chain pressures are less when customers aren’t required to account for the full cradle-to-gate emissions of their suppliers.

Purchasing Sustainable Aviation Fuel

In recent years one of the key innovations in the aviation industry has been the increase in uptake of so-called sustainable aviation fuels (SAF). There are several different types of SAF, however, in general, the idea is to replace fossil fuel-derived aviation fuels with a lower carbon alternative. Because the market is still relatively new and there is a high premium relative to fossil fuel alternatives, some large corporate customers have been purchasing SAF to compensate for the impact of their employees’ flights. The GHG Protocol currently does not provide guidance on how to account for these purchases from an inventory perspective which has led SBTi and organisations such as the Smart Freight Centre to develop their own guidance.

To promote consistency, trust, and support the broader adoption of SAF, it is important that guidance around the accounting for SAF converges and organisations are reporting on these transactions in a consistent way.

The Wrap

In this article we have covered a lot of distance, exploring the available methods for calculating emissions from air travel, taking stock of the emissions factors that are typically used in the calculation and discussing some of the limitations and opportunities presented by current calculation methods.

If you are interested in finding out more about how to practically prepare a GHG inventory in line with the GHG Protocol sign up for a free trial with Sumday and explore our Academy full of learning resources, speak to an advisor in our directory or chat to your accountant.

Until next time, safe travels ✈️