The Complex Relationship between Travel Costs, Emissions, and Climate-related Disclosures

Alfred Tang

Alfred Tang

Feb 18, 20244 min read

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The Complex Relationship between Travel Costs, Emissions, and Climate-related Disclosures

Introduction:

The cost of traveling by train versus flying has long been a topic of debate among travelers. While train fares often seem disproportionately expensive compared to airfares, it is important to consider the environmental impact and climate-related disclosures associated with each mode of transportation. This article aims to explore the factors that contribute to the price disparity, the role of greenhouse gas emissions, and the significance of climate-related disclosures in the travel industry.

The Environmental Impact of Aviation:

Aviation is responsible for approximately 3 percent of global carbon dioxide (CO2) emissions. This staggering statistic highlights the significant contribution of air travel to climate change. However, it is worth noting that the cost of flying does not necessarily reflect the environmental impact it creates. The aviation industry receives various subsidies that allow airlines to offer lower fares, making air travel appear more affordable compared to train journeys.

Polluting Subsidies and Airline Costs:

One reason behind the higher cost of train travel is the presence of polluting subsidies on the airline side. These subsidies, in the form of tax breaks and incentives, provide financial support to the aviation industry, enabling airlines to keep ticket prices relatively low. In contrast, train operators do not benefit from similar subsidies, resulting in higher fares for passengers. This disparity in government support contributes to the noticeable price difference between flying and train travel.

IFRS S2 Climate-related Disclosures and Emissions:

To address the environmental impact of various industries, including the travel sector, the International Financial Reporting Standards (IFRS) have introduced guidelines for climate-related disclosures. The IFRS S2 Climate-related Disclosures require companies to disclose their absolute gross greenhouse gas emissions. These emissions are categorized using the Greenhouse Gas Protocol, which provides industry-based metrics for CO2 equivalents. This standard aims to enhance transparency and accountability regarding emissions and their impact on climate change.

Scope of Climate-related Risks and Opportunities:

The IFRS S2 also emphasizes the importance of reassessing the scope of climate-related risks and opportunities throughout an entity's value chain. This includes considering greenhouse gas emissions resulting from the entity's activities, such as train or air travel. By disaggregating data that represents emissions from parent and consolidated subsidiaries, investees, associates, joint ventures, and unconsolidated subsidiaries, companies can gain a comprehensive understanding of their climate impact. This reassessment allows for better decision-making and the identification of areas for improvement in reducing emissions.

Connecting the Dots:

The higher cost of train travel, when compared to flying, can be attributed to the presence of polluting subsidies in the airline industry. These subsidies allow airlines to offer lower fares, making air travel appear more affordable. However, this affordability does not necessarily reflect the environmental impact of flying. To address the emissions associated with different modes of transportation, the IFRS S2 Climate-related Disclosures provide guidelines for companies to disclose their greenhouse gas emissions. These disclosures help create transparency and accountability, enabling stakeholders to make more informed decisions.

Actionable Advice:

  • 1. Advocate for Policy Changes: As travelers, it is essential to support policies that reduce polluting subsidies in the aviation industry. By advocating for a level playing field between train and air travel, we can encourage fair pricing that incorporates the environmental impact of each mode of transportation.
  • 2. Choose Sustainable Alternatives: When planning our journeys, we can actively choose more sustainable options such as train travel. By opting for trains over planes, we can reduce our individual carbon footprints and contribute to a greener future.
  • 3. Encourage Transparency and Disclosure: As consumers, we can demand transparency and climate-related disclosures from travel companies. By seeking out information on their emissions and climate strategies, we can make informed choices that align with our environmental values.

Conclusion:

The price disparity between train and air travel is a complex issue influenced by factors such as polluting subsidies and environmental concerns. Understanding the environmental impact of different modes of transportation and supporting climate-related disclosures can pave the way for a more sustainable travel industry. By advocating for policy changes, choosing sustainable alternatives, and encouraging transparency, we can contribute to a greener and more equitable future in the world of travel.

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