Rail and road companies leading in ESG

The future of the travel & tourism industry will be shaped by a range of disruptive themes, with environmental, social and governance (ESG) being one of the themes that will have a significant impact on rail and road transport companies. 

According to GlobalData’s Q3 2021 Consumer Survey, 56% of global respondents stated they ‘somewhat’ or ‘completely’ agree that they are more loyal to brands that support green and environmental matters, and 54% echo this sentiment for brands that are loyal to human and social rights matters.

These strong percentages suggest that companies with transparent ESG strategies, which can demonstrate positive work to address environmental and social issues, could win the loyalty of travellers that may be undecided on which company to use for a specific aspect of their trip. Transparency on ESG matters will not only appease consumers; it is now required by several other stakeholders and potential future ones. Investors will often assess a company’s ESG performance when conducting due diligence.

Therefore, many company directors are allocating increasing amounts of capital and resources to address ESG aspects and increase attractiveness. According to a GlobalData poll (ended October 19, 2021, with 1,500 responses), 78.7% of respondents stated that their company now monitors ESG performance directly alongside financial performance. 

However, not all companies are equal when it comes to their capabilities and investments in the key themes that matter most to their industry. Understanding how companies are positioned and ranked in the most important themes can be a key leading indicator of their future earnings potential and relative competitive position.

According to GlobalData’s thematic research report, ESG in Travel & Tourism, leading adopters include: Avis Budget Group, SNCF Group, Deutsche Bahn, Flix, East Japan Railway Company, Europcar, Stagecoach Group, Indian Railways, Enterprise Holdings, National Express, FirstGroup and MTR Corporation. 

East Japan Railway Company  

The East Japan Railway Company is a passenger railway operator. It owns and operates a network between Tokyo and major cities in eastern Honshu and Japan’s main island.

Regarding its trains, the company is promoting the introduction of energy-saving vehicles equipped with regenerative braking that converts kinetic energy during deceleration into electrical energy, as well as VVVF inverters (Variable Voltage Variable Frequency inverters that convert direct currents to alternating currents) for efficient motor control.

Its management vision ‘Move Up 2027’ positions ESG at the centre of its strategy, while its ‘Zero Carbon Challenge 2050’ announced in May 2020 sets out the company’s aim for net-zero CO₂ emissions in the railway business by fiscal 2051. In October 2020, it announced that its Zero Carbon Challenge 2050 would be the goal of the entire Group, and it would work together to achieve net-zero CO₂ emissions.

The company is also committed to social causes. It is promoting town development focusing on central stations in conjunction with central urban district revitalisation projects, urban planning projects, and other initiatives being undertaken by local governments in the vicinity of Akita Station, Niigata Station, Iwaki Station, and Aomori Station.

Deutsche Bahn

Deutsche Bahn is a provider of transportation services. It offers mobility and logistical services, which include passenger rail and bus transportation, freight transportation, and railway infrastructure services.

Its sustainable social commitment comprises safeguarding the company’s long-term success through a system to detect compliance risks early on as well as through safety in railway facilities. Deutsche Bahn has implemented preventive measures to prevent accidents, provides information about hazards at around 5,600 stops and stations throughout Germany, and makes instructional materials and educational videos available.

Besides running various projects and initiatives of its own, the rail company supports many cultural and social centres by means of donations. In 2012, it donated a total of €1.1m ($1.2m) to projects of this kind in Germany alone. 

To further understand the key themes and technologies disrupting the travel & tourism industry, access GlobalData’s latest thematic research report on Cybersecurity in Travel & Tourism.