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Sector Reports - 21/12/2018

The Travel & Tourism Sector: limited progress on highly material issues such as sustainable urban transportation, social disputes and child sex tourism

With the transport sector responsible for 75% of all CO2 emissions worldwide, the development of green tourism and sustainable transportation are key issues for the sector

The report provides Vigeo Eiris’ exclusive opinion on the sector’s strengths, innovations and best practice as well as emerging risks, vulnerabilities and controversies. Performance scores and advanced indicators are provided on critical issues such as environmental strategy, energy transition, integration of social and environmental risks in the supply chain, career management, board of directors and customer relations.


Key Findings:

  • The Travel & Tourism sector contains 83 companies providing travel related services in Europe, North America, Asia Pacific and Emerging Markets. The sector is composed of five subsectors: airlines, tour operators, mass transportation, online booking agencies and car leasing companies.
  • Vigeo Eiris awarded an average overall score of 28 to companies in the Travel & Tourism sector, on a scale of 0 to 100. The sector’s performance has increased by 1 point (27/100) since our previous analysis.
  • The sector ranks 32nd out of Vigeo Eiris’ 39 sectors, covering a total research universe of 4,500 companies. The sector previously ranked 35th.
  • Sector leaders are concentrated in Europe whilst laggards are mostly listed in Emerging Markets, with respective average scores of (52/100) and (11/100).
  • The Travel & Tourism sector reporting rate is 53%, slightly below the universe average (55%), with European companies communicating most comprehensively on their ESG policies, practices and performance. These companies mainly report on topics related to customer safety, the respect for freedom of association and the right to collective bargaining, the reduction of energy consumption and related emissions and the promotion of labour relations. Topics with the lowest level of disclosure include the responsible management of reorganisation, the development of green products and services and responsible lobbying.
  • ESG risk mitigation scores are limited in relation to operational efficiency (32/100) and weak in relation to human capital (24/100), reputation (29/100) and legal security. In terms of managing issues that could impact legal security, the sector displays a weak average score (26/100) which is below the universe average (32/100), as well as for human capital and reputation with respective average universe scores of (27/100) and (32/100).
  • The sector’s willingness and capacity to tackle climate change and support the transition to a low-carbon economy remains weak (29/100). European companies lead the sector in efforts to integrate climate considerations into their risk management strategies by setting targets such as the reduction of energy consumption and related emissions. The majority report on fleet optimisation and the use of alternative energy sources like bio fuels, energy wind, solar energy.
  • The sector faces 135 controversies, with 50% of companies facing at least one allegation. The controversy severity level is high for 36% of cases, significant for 12% and minor for 1%. The most recurrent controversies relate to customer relations, anti-competitive practices, customer safety, labour relations and audit and internal controls. Most of these allegations and controversies occur in Europe and North America where access to justice, press freedom and civil society actors tend to be more prevalent and effective both for individuals and groups.

Key Takeaways:

  • Sustainable tourism is an area of sustainable development that can potentially be leveraged to improve social welfare outcomes. Mass transportation and tour operator companies are key in driving and reporting on changes to consumer behaviour and business practices that promote social and environmental sustainability. Despite this, the sector displays weak average performance in green tourism and sustainable urban transportation (24/100). Most companies (58%) do not report on these topics, and only a few set targets and disclose comprehensive efforts.
  • Intense competition has led the airline sub-sector to adopt measures to reduce costs, impacting the quality of remuneration and leading to disputes between airline companies and their employees. The sector displays weak performance on social dialogue and labour rights with average scores of (28.5/100) and (22.7/100) respectively. An area for improvement is the enforcement of collective bargaining agreements, mainly relating to remuneration and working hours. Controversies linked to labour relations and collective bargaining represent 12% of controversies faced by the sector and suggest that constructive social dialogue can contribute to companies’ efficiency and competitiveness.
  • Despite international efforts, the sexual exploitation of children is still a material social responsibility risk for the sector that damages its image and reputation. Yet only 28% of companies disclose a dedicated commitment on this topic. Companies have a responsibility to raise public awareness of this offence and encourage laws and policies in countries in which they operate to align with international conventions on children’s rights. Cooperation between operators in the Travel and Tourism industry is imperative to keep children safe both on and offline.
  • Air transport contributes to 40% of the Transport Sector CO2 emissions which is responsible for 75% of global CO2 emissions. The reduction of CO2 emissions remains a central issue for the Travel & Tourism sector as 84% of companies display significant to heavy carbon footprints. Fleet optimisation and monitoring systems are amongst the measures implemented to tackle emissions. The sector’s average score on energy consumption and related emissions is limited (30/100). Despite a few good examples, 48% of companies in the sector achieve a weak performance.

Best performing areas:
o Board of Directors
o Environmental strategy definition
o Customer relations

Worst performing areas:
o Responsible reorganisation
o Career management
o Protection and reduction of water consummation

Top Performing Companies:
o Europe: SNCF (65/100)
o North America: Delta Air Lines (43/100)
o Asia Pacific: Qantas Airways (43/100)
o Emerging Markets: China Airlines; Latam Airlines (43/100)

Companies making best progress since 2017:
o Europe: Europcar Mobility Group; RATP (+17)
o North America: American Airlines Group; Delta Air Lines (+7)
o Asia Pacific: ComfortDelGro (+6)
o Emerging Markets: China Airlines (+25)

To view an excerpt of our 2018 Travel & Tourism sector report, download the document below.

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icon-download-34x36 Key Findings_Travel & Tourism_Sept 2018
Keywords : ESG