A Partner Perspective: Barbara Karasek in conversation with Margaux Constantin

The 2023 United Nations Climate Change Conference or Conference of the Parties of the UNFCCC, more commonly known as COP28, just wrapped up last week in Dubai. Nearly 200 countries convened by the United Nations approved a milestone plan to ramp up renewable energy and transition away from coal, oil, and gas. And yet, many questions remain about the impact of this high-stakes gathering on tourism – and the leadership that the tourism industry should take in future climate-change conversations. Global tourism is seen as one of the fastest-growing emissions sources.

Paradise CEO Barbara Karasek recently caught up with Margaux Constantin, McKinsey & Company’s Dubai partner who leads the firm’s work in tourism destinations globally. Read the compelling interview below.

Karasek: For destinations that have not yet begun to prioritize the Race to Zero quite yet, what do you recommend is a good first step to take?

Constantin: A good first step is aligning with the global campaigns of the UN’s Race to Zero, which requires members to commit to halving emissions by 2030 and achieving net-zero by 2050. This means being clear on one’s objectives against those goals – how much does this matter to your customers, employees, and shareholders; and setting clear quantified targets from there.

The second step is to understand where the emissions are coming from (if we are focused on decarbonization). For instance, in hospitality approximately 75 percent of emissions come from “Scope 3” emission types (purchased electricity, steam, heat and cooling). That helps inform the most effective reduction levers – in this case, using renewable energy sources, switching to LED lighting, and improving buildings’ energy efficiency. The tension is that, increasingly, the owner and the operator of the hotel are not the same and so incentives are not always aligned. Therefore, an important step will be to identify the win-win amongst all stakeholders.

Karasek: Over the past few years, there has been an increase in trends for consumers wanting more sustainable and eco-friendly options and a desire to also be mindful of reducing their environmental impact as a tourist. What are the top resources for destinations to understand what consumers are looking for or expecting from destinations concerning sustainability and the environment?

Constantin: First let’s clearly define what sustainability encompasses, beyond Race to Zero and decarbonization. According to the World Tourism Organization, sustainable tourism addresses the needs of visitors, the industry, the environment, and host communities based on three interdependent factors:

1. Social sustainability¸ meaning respect for the socio-cultural authenticity of host communities, support for local businesses, and levels of tourism that are acceptable to local communities.
2. Environmental sustainability, meaning reducing environmental impact and preserving natural heritage and biodiversity.
3. Economic sustainability, meaning the pursuit of economic growth that does not negatively impact a community’s social, environmental, or cultural aspects.

In 2022, Booking.com found that more than 70% of global travelers intend to travel more sustainably over the next year (a 10 p.p. increase from 2021), and 35% said that sustainability plays a strong role in their decision-making process.

Similarly, a McKinsey survey reported that 36% of leisure travelers plan to fly less to reduce carbon emissions [HK1].

• Several organizations are trying to keep their finger on the pulse of what consumers say and do regarding sustainable travel: McKinsey, Booking, Expedia, and UN Environmental Programs, among others.
• Destinations can also run their own surveys, which can provide helpful insights to better understand the nuances of travelers.
  • Some creative ways to gather this intelligence include airline arrival forms and email exit surveys.
  • Several online travel agencies such as Booking.com, TripAdvisor, and Airbnb have started incorporating information related to the sustainability of their properties (such as green leaf). Destinations could partner with those platforms to better understand the purchasing patterns that this increased level of transparency has fostered.

Karasek: What would some good milestones be for the tourism sector in relation to COP28 goals?

Constantin: Some global pledges for the industry already exist. One example is the Glasgow Declaration on Climate Action in Tourism, which aligns with the goals of the Paris Agreement to halve carbon emissions by 2030 and achieve net zero by 2050. It provides a standardized way to approach net zero and has already been signed by over 700 travel companies, destinations, and organizations from 130 countries.

COP28 is an opportunity to build on existing efforts. For instance, target-setting is critical and there are a couple ways that destinations can measure this. One tactic is to look at the percentage of institutions that have set targets across travel and tourism operators: hotels (both owners and operators), airlines, tour companies, and cars/buses. If the targets don’t include the whole value chain holistically, it will be difficult for the industry to deliver.

If we are to build on existing efforts and collate various pledges, we could see an outline for the global sector to set targets across a wide range of dimensions. For instance:

• Carbon Emission Reductions: Aim for a 45-50% reduction in carbon emissions from 2010 levels by 2030, progressing towards net-zero emissions by 2050.
• Renewable Energy Adoption: Target at least 60% of the tourism sector’s energy coming from renewable sources by 2035.
• Sustainable Transportation: Increase the use of electric or zero-emission vehicles in the tourism industry to 50% by 2030 and aim for 80% by 2040.
• Biodiversity Conservation: Commit to increasing protected areas to cover 30% of key biodiversity areas by 2030, with active efforts to restore degraded ecosystems.
• Waste Reduction: Implement initiatives to reduce waste in the tourism sector by 50% by 2030, with a focus on eliminating single-use plastics and improving recycling rates.
• Water Conservation: Set a goal to reduce water usage in the tourism industry by 30% by 2030 through the implementation of water-saving technologies and practices.
• Sustainable Certification: Aim for at least 40% of all tourism businesses and destinations to achieve sustainable tourism certification by 2030.
• Local Community Benefits: Ensure that at least 25% of tourism revenue directly benefits local communities by 2030, with increased support for community-based tourism projects.
• Education and Training: Set a target to educate and train 70% of tourism professionals and stakeholders on sustainable practices by 2030.
• Green Investment: Commit to directing at least 30% of tourism investment towards sustainable infrastructure and practices by 2030.
• Carbon Offsetting: Encourage 50% of tourists and tourism companies to engage in carbon offsetting practices by 2030.

Karasek: Global tourism is seen as one of the fastest-growing emissions sources, with expected annual growth of 4 percent, and accounting for 8 percent of the world’s carbon emissions (Nature Climate Change 2018 report), not to mention that as an industry ours accounts for 10% of global GDP. Yet we haven’t had representation in the latest COP28 discussions. Where do you see our presence in future talks?

Constantin: Tourism should continue to have a seat at the table in terms of solving this problem. Because of its cross-border nature, tourism also gives countries an opportunity to work together to find mutually beneficial solutions. But this will be a long journey given industry fragmentation and the breadth of the value chain.

We already see some destinations that have made big commitments. These could inspire further collective, global action. For instance:

• Bhutan’s tourism model, which includes a sustainable development fee to offset tourists’ carbon impact, reflects its commitment to high-value, low-impact tourism.
• Norway’s approach to sustainable maritime tourism. By 2026, western Norway’s fjords plan to allow only zero-emission electric ferries, cruise ships, and tourist boats. The Norwegian cruise company Hurtigruten aims to operate the world’s first battery-hybrid powered expedition ship along the Norwegian coast by 2030, reflecting a commitment to sustainable maritime transport.
• Panama, which is developing Central America’s first green bus route in Panama City’s UNESCO World Heritage-historic district, emphasizing sustainable urban transport in tourism destinations.
• Costa Rica, which has over a quarter of its land protected as national parks or reserves. The country’s Certification for Sustainable Tourism (CST) program sets benchmarks for hotels, tour operators, and other tourism businesses.
• Sweden, which has become a pioneer in sustainable travel experiences. The country has numerous eco-labelled hotels and a strong focus on nature-based tourism, aligning with consumer desires for eco-friendly options.

Karasek: How can we encourage the tourism industry to take a more active role in global climate discussions?

Constantin: We will start to see the industry get more engaged and more actively measure impact as the risks get heightened.

For instance, destinations face increasing climate risk. If we take Spain as an example, the number of days over 37 degrees Celsius is expected to double by 2050. Extreme weather is already causing significant travel disruptions which are costly to destinations and operators alike.

There are a few enabling factors that could encourage bigger shifts in the industry in terms of regulations, certifications & standards and incentives. To give a few examples:

• Introducing industry-wide certification templates – or encouraging the adoption of existing ones. Destinations could either copy the certifications laid out by leading countries such as Costa Rica or follow the Global Sustainable Tourism Council’s guidelines.
• Establish clear, quantifiable emission reduction targets for the tourism industry, such as aiming for a 50% reduction by 2030 and net-zero by 2050. Example: The International Air Transport Association (IATA) has set a target to cut net aviation carbon emissions to half of 2005 levels by 2050.
• Provide incentives for businesses to obtain sustainable tourism certifications. These incentives could be tied to things like tax breaks.
• Promote Sustainable Tourism Investment through targeted incentives focused only on sustainable offerings.
• Encourage educational campaigns and trainings, such as the UNWTO Academy’s specialized training in sustainable tourism.
• Develop an industry-wide framework for monitoring and reporting sustainability metrics.

Karasek: How can we better educate destinations and their partners on the need for sustainability in tourism?

Constantin: Our recent work on sustainable tourism in China suggests that travelers in the country view industry changes as a shared responsibility between government, the industry, and the choices of travelers themselves.

• Clear research on the environmental impacts of travel, alternative choices and the benefits of these options could enable all of the actors in the ecosystem to effect change.
• The main areas of change from the consumer perspective include the availability of information about environmental impact, reducing consumable packaging waste, choosing local foods and products, and shopping sustainably (no bags, etc.)
• For travel providers, the primary areas include increasing exposure and availability of renewable energy sources, incentives for energy consumption reduction, water waste reduction and less consumable waste (food, plastics, etc.).
  • More broadly, other countries are taking an integrated approach with the goal of developing tourism that is more resilient, sustainable, and inclusive. Governments are partnering with the private sector to support initiatives, for example:
    • Adapting a country’s tourism offerings to reduce seasonality and the strain it puts on local infrastructure and resources. Increasing visitors in off-peak periods can lead to year-round jobs and businesses.
    • Slovenia has committed to 20 projects to transform mountain destinations into year-round resorts for active holidays (beyond ski)
    • Norway’s “Norway all year round” plan aims to spread tourist traffic across several locations and seasons. This aims to attract travelers who are available to travel all year round