Intervention ‘could unlock investment’. Ian Taylor reports from A World for Travel
There is no shortage of money to address the challenges of climate change and make travel more sustainable, but it requires stronger intervention by governments.
That is according to leading industry consultant Kata Cserep, managing partner for aviation and travel at professional services firm ICF.
She described the climate crisis as the result of “huge market failures” but insisted “there are trillions available” for investment.
Speaking at the A World for Travel forum in Nîmes last week, Cserep argued: “We’ve not been paying for the externalities we’ve been using [in travel]. We shouldn’t be patting ourselves on the back. These are huge market failures. People have been so competitively driven and trying to out-compete everyone.”
She insisted governments “have to intervene where there is an obvious market failure”.
Cserep noted “the mismatch between those who want to buy sustainable aviation fuel [SAF] and those who produce it” as an example and said: “There is a role for governments to provide frameworks [to address this]. There isn’t a shortage of money.”
She suggested the development of “flight shaming” in Sweden had led the EU to develop its ‘SAF mandate’ and noted: “From 2025-26 it will be the law in Europe that 2%-3% of aviation fuel is SAF.”
Cserep argued: “Resilience has shot up the list of concerns – not just climate resilience but also financial resilience. Covid has accelerated sustainability. Airlines were starting to address their climate commitments when the global financial crisis hit. That took precedence then. It has not happened this time.
“No one used to ask about the environmental risks and regulatory risks [when investing]. Now they come up every time.”
Sebastian Manceau, senior partner at management consultancy Roland Berger, agreed, saying: “Sustainability was a small paragraph at the end of a report [to investors]. Now it’s a huge part. Environmental and social governance [ESG] is now systematically important.”
He argued: “Not many companies have a strong ESG agenda. Travel is a long-term, growing sector. There is an opportunity for companies to differentiate themselves by having a strong ESG agenda.”
Henry Briance, partner at private equity firm Certares, told the forum: “There are multiple capital sources looking to make investments in good companies and good projects in the sector.”
Cserep noted the industry attracted “almost a frenzy” among investors before the pandemic “with a huge amount of capital chasing a few opportunities whenever an acquisition became available”.
She argued: “Covid exposed that. The perspective on the industry has changed – there is no getting away from that. But the economic positives exceed the downsides. There is no shortage of money.”
The forum identified five priorities for action by industry leaders, associations and governments in the next 12 months: cross-sector collaboration, strong state and regulatory support, clear communication to raise awareness, investments “at scale”, and systematic measuring and reporting.