Carbon Management

Reducing carbon emissions across our operations

Travel and tourism account for 11% of the world’s GDP and 12% of its exports, and are responsible for around 5% of global CO₂ emissionsⁱⁱⁱ. As a leading tour operator, our challenge is to prepare for a low-carbon society by further reducing our environmental impacts, while ensuring we preserve tourism’s social and economic benefits – both for the host community and our customers.

We are very aware that destination quality, attractiveness, weather and comfort levels are key determinants of customer decision-making, the quality of holiday experiences and thus our business success. The natural and cultural assets on which our products are built could be affected by climate change through changes in weather patterns, pressure on energy and water supplies and damage to infrastructure- all of which may impact on our holiday planning. We aim to embed carbon management into key business processes in order to limit our contribution to climate change. Climate change has been identified as a strategic and emerging risk in relation to our business (See our Annual Report 2009). By focusing on carbon management we are able to achieve cost efficiency savings and respond to growing customer demand for greener holidays.

In 2008/09, TUI Travel’s direct carbon footprint (from diesel, gas, kerosene and petrol) was 6,447,370 tonnes of CO₂, a reduction of 3.6% since 2007/08. This reduction is attributable to ongoing aircraft fleet consolidation, as well as fuel conservation measures. In terms of relative efficiency for TUI Travel airlines the position weakened very slightly, from 77.9g CO₂ per RPK (Revenue Passenger Kilometre) in 2007/08 to 78.1g CO₂ per RPK in 2008/09. However we still remain one of the most efficient airlines in Europe. Furthermore we are making significant investment in new replacement technology like the Boeing 787, which will have exceptional environmental performance

TUI Travel has a carbon management strategy covering aviation, water transport, major premises, ground transport and flagship hotel properties. TUI Travel is monitoring and preparing for regulatory proposals on climate change that could have a fiscal impact. By addressing our carbon impacts and putting measures in place to reduce current and future carbon emissions, we are in a good position to respond to carbon legislation.

Goal: To reduce TUI Travel’s direct carbon emissions by 6% by 2013/14 (against a baseline of 2007/08) in terms of total carbon emissions as well as relative (per passenger) carbon emissions based on current operational structure and plans.

Board sponsor: Paul Bowtell, Chief Financial Officer.

"TUI Travel is included in the Carbon Disclosure Leadership Index, which highlights the top 10% of FTSE350 companies that have displayed the most professional approach and
transparency to climate change disclosure." Read our 2010 submisson

Carbon legislation & policy

Although national and international regulations present operational challenges, we also welcome the opportunity to move beyond simply complying with the letter of the law, to exceed industry benchmarks. TUI Travel worked closely with the UK Conservative Party Shadow team ahead of the recent election to assist in their thinking on replacing the UK APD (Air Passenger Duty) with a per plane tax, which the new coalition government is now considering (and TUI Travel strongly supports). Thomson Airways, our UK airline, has excellent load factors (90% in 2008/09) and fuel-efficiency per Revenue Passenger Kilometre (RPK) of 75.5g CO₂in the same year and should therefore be well placed to benefit from a per plane tax that rewards and incentivises responsible aircraft operators. Thomson Airways performance compares very favourably with both global scheduled airlines and low-cost airlines.

We are supportive of the inclusion of aviation in the European Union’s Emissions Trading Scheme (EU ETS) but believe there should be a global emissions trading framework for aviation which channels monies raised from auctioning emissions allocations into environmental solutions rather than national coffers. We also do not want to see the aviation industry being hit twice, both by national governments in tax raising schemes and also by EU ETS. The EU ETS and the UK Carbon Reduction Commitment Energy Efficiency Scheme (CRC) www.decc.gov.uk/crc will reward our energy saving practices including the fuel efficiency record of our aircraft fleet and our focus on low energy fittings in our retail refurbishment programme.

"TUIfly Nordic has an
ISO14001 certified
Environmental Management
System – the first leisure
airline to attain this external certification"

Carbon management in action

Threats from climate change make a clear business case for a prudent approach to environmental management, which has been embraced by the Board and throughout our organisation. In advance of likely mandatory carbon reporting in the UK and the EU, we are already capturing, monitoring and reporting data on carbon emissions and setting year-on-year targets for emission reductions. We have committed to reducing TUI Travel’s direct carbon emissions by 6% by 2013/14 (against a baseline of 2007/08) in terms of total carbon emissions as well as relative carbon emissions, based on current operational structure and plans.

As well as appointing Airline Environmental Managers in Thomson Airways and TUIfly Nordic we are maintaining a progressive fuel conservation programme across TUI Travel airlines, which saved over 34,000 tonnes of carbon dioxide in 2008/09. TUI Travel is replacing older aircraft with new, more fuel efficient models, such as the Boeing 787 Dreamliner, which is due to have 20% lower fuel burn than a comparably-sized aircraft operating today.

By improving our environmental performance we are experiencing eco-efficiencies such as as TUI UK & Ireland’s PC switch-off initiative which is estimated to save 4.5M kWh of energy in 2008/09 (2,000 tonnes of CO₂). We are also encouraging all of our mainstream tour operating businesses to adopt the Travelife Sustainability System – helping to reduce carbon emissions from our third party suppliers www.its4travel.com.

As well as our carbon management strategy to reduce carbon emissions across our operations the Group contributes to many carbon emission reduction projects around the globe. TUI Travel, in partnership with ClimateCare, has invested in five exclusive renewable energy projects in destinations important to TUI Travel, that are scheduled to deliver in excess of 400,000 tonnes of CO₂ reductions by the end of 2012. The projects are all accredited to Gold Standard, an independent organisation that verifies the delivery of robust carbon reduction and additional community benefits. www.cdmgoldstandard.org, www.jpmorganclimatecare.com

Penguins

"34,000 tonnes of CO₂ saved by TUI Travel airlines fuel conservation programmes in 2008/09"

"Boeing 787 - TUI Travel is scheduled to be the UK launch customer"

TUI Travel’s carbon footprint in 2006/07, 2007/08 and 2008/09 (tonnes of carbon dioxide equivalent)

	2006/07	2007/08	2008/09
Scope 1 emissions^iv	7,173,814	6,564,026	6,297,794
Scope 2 emissions^v	95,021	53,475	104,408
Scope 3 emissions^vi	Not available	70,597	45,167
TOTAL	7,268,835	6,688,097	6,447,370
% reduction year on year	N/A	8%	3.6%

Working with stakeholders - carbon management

Our many stakeholders expect us to operate as an environmentally responsible company and to provide transparent evidence of our carbon management and footprint. We have developed collaborative partnerships with many stakeholders whose insight and guidance is helping us to develop a more progressive position on aviation and climate change. For example:

We are working with Forum for the Future to pilot their Better Decisions, Real Value tool – a set of methodologies to help make financial decisions about sustainable development issues www.forumforthefuture.org/projects/better-decisions-real-value
We are a partner of the EU Clean Sky project which aims to conduct research on how to minimise en route aviation emissions across Europe’s skies www.cleansky.eu
We are a member of the Prince’s May Day Network, a group of UK companies committed to reducing carbon emissions www.maydaynetwork.com
We are a founding signatory member of the UK aviation industry’s Sustainable Aviation group, working to develop a leadership position on aviation and climate change www.sustainableaviation.co.uk
We are a member of SAFUG (Sustainable Aviation Fuel Users Group), an initiative comprising a number of global airlines whose principal aim is to accelerate the commercialisation and usage of sustainable aviation fuels www.safug.org
We are a member of the Passenger Shipping Association’s Sustainable Tourism Committee, set up to share best practice www.the-psa.co.uk

"Prince’s May Day Network -
TUI Travel is a member of
this group of UK companies committed to reducing carbon emissions www.maydaynetwork.com"

Carbon Management targets

Workstream objectives	Our 2008/09 targets	How we performed	Our targets for 2009/10
Airlines Reduce carbon emissions from our fleet of aircraft by 6% by 2013/14 (against a baseline of 2007/08)	Group: Set carbon reduction targets for each airline	Achieved: Carbon reduction forecasts have been set for each airline	Group: Establish a TUI Airlines Biofuels Working Group to research and develop a biofuel strategy Group: Establish a TUI Airlines Environmental Working Group to develop a groupwide approach to environmental issues (non-fuel conservation) Group: Fit winglets to another 10% of TUI Travel Airlines aircraft Group: Roll out sustainable development clauses in airline procurement processes in one or more Sectors TUI Nordic: Sort and recycle 50% of waste generated onboard TUIfly Nordic flights TUI UK & Ireland: Achieve a minimum of 97% compliance for monitored on-track departures and continuous descent approaches for Thomson Airways (excluding Air Traffic Control instructed or safety related deviations) TUI UK & Ireland: Reduce the weight of Thomson Airways fleet by 6.5 tonnes by the end of 2010
	TUI Nordic: Achieve ISO14001-certified Environmental Management System in TUIfly Nordic	Achieved: TUIfly Nordic has an ISO14001 certified Environmental Management System TUI Travel airlines emitted 5,778,712 tonnes of carbon dioxide in 2008/09 TUI Travel airlines emitted on average 78.1g of carbon dioxide per revenue passenger kilometre (CO₂/RPK) in 2008/09t
Water Transport Reduce carbon emissions from our cruise operations (those we operate or where we control fuel use)	Group: Set carbon reduction target for cruise operations	Achieved: Carbon reduction target was set for Thomson Cruises. See 2009/10 target	Group: Achieve a 5% reduction in carbon emissions from Thomson Cruises’ Egyptian cruise programme in 2009/10 versus 2007/08 baseline Group: Develop best practice guidelines and distribute to cruise businesses Activity: Integrate sustainable development clauses into TUI Marine procurement
	Group: Develop best practice guidelines and distribute to cruise businesses	Partially Achieved: Data gathering was completed. Target rolled over to 2009/10 TUI Travel cruise operations emitted 301,802 tonnes of carbon dioxide in 2008/09 TUI Marine operations emitted 9119 tonnes of carbon dioxide in 2008/09 TUI Travel cruise & expedition ship operations emitted an average of 368g carbon dioxide per passenger kilometre in 2008/09
Major Premises Reduce carbon emissions from TUI Travel’s major premises (those we own or where we control energy use)	Group: Major premises were identified and baseline carbon emissions data calculated for the majority	Partially Achieved: Majority of major premises were identified and baseline carbon emissions data calculated	No target for 2009/10 Group: Develop best practice guidelines and distribute to key contacts TUI UK & Ireland: Reduce Thomson and First Choice shops carbon emissions by 7% TUI UK & Ireland: Reduce brochure printing by 5% by the end of 2010 (printing more than 300 million fewer brochure pages) Group: Integrate sustainable development clauses into Group IT procurement Group: Develop a strategy to comply with the Carbon Reduction Commitment Energy Efficiency Scheme (UK businesses only) TUI Central Europe: Reduce TUI Deutschland's head office energy consumption by 5% by the end of 2011 TUI UK & Ireland: Recycle 65% of the general waste from Thomson and First Choice shops, and recycle 100% of unused and returned brochures and confidential waste Specialist & Emerging Markets: Reduce carbon emission in the UK Specialist Division head office by 6% (relative to 2008/09)
	Group: Develop best practice guidelines and distribute to key contacts	Partially Achieved: Data gathering was completed. Target rolled over to 2009/10
	TUI UK & Ireland: Reduce energy use in offices and shops by 5% (relative to 2007/08)	Partially Achieved: Reduction of 2.65% was achieved (relative to 2007/08)
	TUI UK & Ireland: Reduce paper use in offices and shops by 10% (relative to 2007/08)	Achieved: Reduction of 13.45% was achieved (relative to 2007/08) TUI Travel’s premises emitted 35,288 tonnes of carbon dioxide in 2008/09
Ground Transport Reduce carbon emissions from our ground transport operations (those we own and our ground transport suppliers)	Group: Set carbon reduction target for ground transport	Not Achieved: This was not achieved. Target rolled over to 2010/11	No target for 2009/10 Group: Develop best practice guidelines and distribute to ground transport businesses
	Group: Develop best practice guidelines and distribute to ground transport businesses	Partially Achieved: Data gathering was completed. Target rolled over to 2009/10 TUI Travel ground transport operations emitted 17,333 tonnes of carbon dioxide in 2008/09
	TUI Nordic: Develop the Blue Train by adding routes, shortening journey time and increasing comfort	Achieved: Additional routes and destinations were added to the Blue Train product offering
Flagship Hotel Properties Reduce carbon emissions from TUI Travel’s flagship hotel properties	Group: Identify flagship hotel properties and calculate baseline carbon emissions	Partially Achieved: Flagship hotel properties were identified and carbon emission baselines calculated for 95% of properties TUI Travel flagship hotel properties emitted 101,625 tonnes of carbon dioxide in 2008/09	No target for 2009/10
TUI Travel new-build flagship hotel properties are built to best practice sustainability guidelines and TUI Travel flagship properties operate to exemplary sustainability standards	Group: Draft TUI Travel best practice environmental and social standards for flagship property operations	Partially Achieved: Draft guidelines were developed, but this was not achieved within 2008/09	Group: Finalise TUI Travel new build and operational, environmental and social guidelines for flagship properties
	Group: Draft TUI Travel new build best practice sustainability guidelines for siting, design and construction	Partially Achieved: Draft guidelines were developed, but this was not achieved within 2008/09