Carbon budgets are one of the most powerful tools for enabling grassroots emissions reductions while ensuring climate compliance. In this Expert Exchange, we heard from trailblazers that use carbon budgets within their business: Jill Smit from Arcadis, and Johnny Thorsen from Spotnana. They offered their insights on setting budgets, getting stakeholder buy-in, and ensuring on-going compliance.
View the original webinar recording
Back to basics—what is a carbon budget?
Carbon budgets are internal limits on employees’ carbon emissions for a specific period. They are set by companies to reduce emissions and align with sustainability goals.
The benefit of carbon budgets is that they are a quantifiable, easy-to-understand solution for managing “spend”—think financial budget, but with carbon not capital. They empower employees to be responsible for their own emissions, and provide them the freedom to choose how to spend it. This puts less emphasis on strict adherence to challenging, and sometimes controversial policy changes (e.g. the downgrading of business class flights), and puts the emphasis on what’s most important at the end of the day: the carbon emissions that we all generate.
Still, carbon budgets also suffer some problems. They can be difficult to establish, they are often challenged by budget owners if they feel like they haven’t been consulted, and their visibility can be lacking when it matters most (i.e. at point of booking).
These obstacles are already being overcome, with more tools for tracking carbon budgets becoming available and increasing consumer pressure on online booking tools (OBTs) to incorporate them. They are also a great lever for supporting decarbonization goals and demonstrating dedication to ESG practices—which is vital to talent attraction and retention.
Setting up carbon budgets
Our Head of Customer Success, Charlotte Manthe gave a very high level overview of how you can set up carbon budgets during the webinar:
If you like the sound of this, our Advisory team is available to help you get started on your own carbon budget!
Who is responsible for sustainable travel?
We asked our webinar audience who was responsible for sustainable travel in their organization. 20% of the respondents confirmed they had a dedicated sustainability travel manager, while 60% said it was either the travel or sustainability teams’ responsibility. The final 20% said no one in their business is currently responsible for it.
“Sustainability Travel manager is a real momentum-building role that can navigate the terminology and requirements of sustainability, whilst being empathetic to the travel team” added Charlotte Manthe.
Want your own plug-in Sustainability Travel Manager?
Reach out to our Advisory team today
Hearing from a sustainability travel manager: Arcadis’ journey with carbon budgets
Jill Smit, Sustainability Travel Manager at Arcadis filled us in on why carbon budgets are important to her business. “As a consultancy, travel is a vital part of doing business. Carbon budgets are there to help us get clarity over how much we can travel.” Jill explained, “Without any guide rails it’s hard to move a company in a certain direction. In order to meet our targets, for both general and air travel, we need information provided to the employees on what they can and cannot do.”
“If you don’t have a Jill (Sustainability travel manager) in your programme, she is the perfect model to attack [travel program decarbonization] in a smart way”
-Johnny Thorsen
Overcoming the initial obstacles
“We needed to make our travel emissions data reliable and available before we could start the conversation around carbon budgets. We were previously using DEFRA, but we knew we’d need to go beyond this in our reporting.” Jill continued, “We set our 2025 reduction targets and it became the star on the horizon. Having that goal in mind, we backtracked to set the carbon budgets”
In Jill’s case, even having the targets and budgets set was not enough. “Carbon is practically an unknown currency. If you’ve never lived in Japan you don’t know what you can buy with 100k yen. We need to understand what it means to have 1 tonne of carbon. Education takes time and effort and a lot of repetition.”
Jill suggests, “Getting your teams to forecast what they need [in tonnes of CO2e] helps with disseminating understanding about what tonnage means […] and help people understand what they can do with that amount.” She explains, “When you have 10 tonnes of CO2, how many times can you do the trip to New York? This is both a top-down and bottom-up approach to build that familiarity [with carbon emissions]”
Arcadis have set up their reduction targets and budgets using Thrust Calculator
We'll show you how Thrust Calculator can become the foundation of your sustainable travel program.
Adherence to carbon budgets
One of the most salient audience questions posed to our panel was whether they thought people would adhere to carbon budgets at the same level as they do for financial budgets.
“It’s difficult to compare financial and carbon budgets because we’ve been using the former for 130 years. But it’s all about freedom within a framework — you can grow in one part and reduce in another part. And don’t just focus on one number – any improvement is worth celebration”, answered Jill.
“I hope when you set a budget, everyone will try their utmost to adhere to it because otherwise we’re not going to fix [the climate crisis] together.”
-Jill Smit
The future of carbon budgets
Johnny Thorsen, VP of Business Development for Content Distribution at Spotnana, addressed the future of carbon budgets at point of sale. “Getting all the information in front of them helps them make an informed choice. 2025 will mark the year where real green-travel policies start kicking in. The moment there is a legal requirement to report a number, we see people trying to reduce that number.” Johnny went on to sharpen his point on consumer focus, “Sustainability will be decided by the customer. Whatever we build it has to be designed to fit their way of doing business”
The next few years will prove critical in determining how the tech sector will support companies’ decarbonisation initiatives. But will carbon budgets become more popular? We certainly think so! Under the EU’s Corporate Sustainability Reporting Directive (CSRD), businesses must align to a 1.5 degree net-zero strategy, and carbon budgets are one of the few tools guaranteed to bring around real change on the journey to net-zero.
