Meeting customer concerns over greenhouse emissions

And, growth is still favoured in spite of the challenging macroeconomic conditions. A CEO of a leading German cruising company said in an interview that he hopes for 2 million cruise passengers per year by 2020.

Since 2011, German company Hapag-Lloyd offers carbon neutralisation to passengers on a voluntary basis. If the passenger agrees, a donation is made to a partner organisation which uses the funds raised for initiating environmental projects aimed at reducing greenhouse gas emissions. Emission reductions funded by the consumer correspond to the per capita emissions attributable to him for participating in the cruise.

Environmental consciousness amongst consumers is rising just like the fascination for cruising holidays is. Environmentalism is no longer the hobbyhorse of a few anti-establishment fanatics on the edge of society, but has reached its very centre. At least a moderate degree of concernedness about environmental issues is a common trait of most citizens in industrialised countries. Presently, most people are unaware about the ecologic impacts a cruising holiday has with regard to climate change. The intuitive expectation is that a cruise ship does not emit so much, because it is not fast and does not fly through the air. Everyone knows that flying is bad for the environment. But cruising? This is, however, already changing.

It is no longer unusual that on-board staff are confronted with questions on the environmental performance of their ship. In addition, environmental NGOs have begun highlighting ecologic implications of cruising aiming to further raise consumer awareness. Every now and then, there is a press article about the environmental consequences of cruising or shipping in general with regard to air pollution and climate impact.

While there is a lot the industry can do – and already has done – to reduce its ecological footprint, available measures to reduce carbon dioxide emissions are facing technical constraints. Once options such as hull streamlining optimisation, propeller design and potential to reduce on-board electricity consumption have been exploited, additional efficiency gains are often hard to implement. Although carbon savings entail fuel savings, not every available measure is theoretically economically viable. In any case, even a very fuel efficient ship still is a significant source of carbon dioxide emissions.

Hapag-Lloyd’s move therefore can be regarded as a pre-emptive measure to address potential passengers concerns about that part of carbon dioxide emissions that are unavoidable. Thereby, Hapag-Lloyd cannot only demonstrate that they take their passengers’ concerns seriously, but also provide new content for marketing and public relations activities. Also, they may succeed in appealing to consumers who so far had not seriously considered cruising as a holiday option due to environmental concerns.

Admittedly, greenhouse gas emissions from ships are only of minor significance compared to global emissions, even more so when solely looking at the cruising industry. However, cruising is serving consumer – rather than business to business – markets and thus especially dependent on what people think about it. Not only the passengers’ opinion is of importance, but also the viewpoint taken by neighbours, friends and family. If cruising ever became something regarded as socially not quite acceptable, sales figures would suffer.

There is quite some probability that environmental campaigning and press coverage may turn the tide against the industry, unless it makes use of all options to alleviate its environmental footprint in a credible way. Unavoidable carbon dioxide emissions, of course, remain problematic due to the unavailability of an all encompassing technical solution.

Our team at the Climate Concept Foundation (CCF) is convinced that actively involving the consumer is the most promising solution. By offering a credible solution for neutralising the unavoidable carbon dioxide emissions attributable to a specific consumer, a cruise company can pass on the “emotional responsibility” to its passengers. We believe that this is where it belongs.

Thus enabled, the consumer can make a conscious choice how to deal with this issue. Taking part in the neutralisation scheme remains completely voluntary. The passenger shall be informed appropriately without being pushed. Also, the communication must be solution-focused and not putting too much emphasis on the problem as such.

The consumer is informed that a donation could be made to CCF into an account held in trust by the cruising company. This suggested amount is calculated so that it is sufficient for financing CCF’s climate change mitigation activities in congruence with the emissions attributable to the consumer.

A donation made into this account is subsequently forwarded to CCF. We use it for financing emission reduction activities. Whilst adhering to maximum ecological standards (in fact matching or even exceeding the criteria established for the United Nations’ Clean Development Mechanism), we put an emphasis on initiating climate change mitigation in countries, for which the currently existing incentive systems are unavailable. Our projects offer valid, additional and permanent emission reductions independently audited by UN-accredited institutions. Project types are of a large variety: we work in promoting the proliferation of renewable energies, providing alternatives to forest degradation caused by local firewood consumption and support the use of state of the art greenhouse gas abatement technologies in countries where these technologies are not yet being used.

Donating passengers can rely on CCF’s trustworthiness as we are state controlled. Being a registered charitable organisation, our funds must be used for furthering the organisation’s statutory goals. Due to our charitable status, we can issue donation receipts to our donating passengers which allow deducting the donation made from taxes.

Carbon neutrality is amazingly cheap. Let us look at an example: Emissions of 1200 gCO2 / pkm (i.e. per passenger and kilometre) are quite usual for average cruise liners. Assuming a cruise covering a distance of 1,400 km, this entails more than one and a half tonnes of carbon dioxide emissions that can be attributed to each passenger on the ship. This already includes a 5% safety margin for factors such as adverse weather conditions that cause higher fuel consumption.

In reference to current carbon prices, the aforementioned cruise could be set carbon neutral for as little as € 18.36. At the same time, carbon neutrality should not cost more than about €60 for the foreseeable future due to a natural price ceiling putting a lid on perceivable price developments.

If a passenger donated €28.22 to CCF for carbon neutralisation, we could finance emission reduction measures ensuring full coverage of all emissions associated with the cruising experience.

Consumers enabled to address the climate impact of their holiday of choice have an additional argument for themselves (but also in discussion with people potentially capable of influencing their decisions) why cruising is a type of leisure activity that is perfectly compatible with being an environmentally responsible person. This, in turn, will reinforce the long term attractiveness of cruising and ensure a sustained continued growth of the industry.

Cruising companies can demonstrate their commitment to fully addressing the environmental challenges associated with their business.

If you would like to learn more about CCF’s cooperation offer, please contact the author mailing to: brandt@climate-concept-foundation.org.

Firstly, there is a business case. Consumers are becoming more and more aware about environmental issues.

An example for this is a consumer segment identified by marketers in the mid-2000s, the LOHAS. This acronym stands for “Lifestyle of Health and Sustainability”. It represents a consumer segment of above average income and education which is most strongly represented in the 40 to 60 years age group. These consumers would like to enjoy themselves, but at the same time are environmentally concerned about the ecologic impact their consumption choices may entail.

Effectively marketing cruises as the preferred holiday option to consumers that are increasingly environmentally aware will pose a challenge to the industry. Cruising companies that have credible and reliable answers to consumer concerns will have an advantage.

While a fuel efficient fleet and/or the introduction of technical measures to improve efficiency certainly are an important part of the equation, consumers will also be worrying about emissions that cannot be avoided by presently available technology. If taking part in a cruise means comparatively serious harm to the environment, such consumers may prefer other ways of spending their holidays.

Secondly, CCF’s cruise industry partners also benefit from offering carbon neutrality to their consumers from a public relations perspective. Making carbon neutralisation available to consumers creates an opportunity to further improve the company’s public perception by various stakeholders.

Firstly, we initiate environmental projects in developing countries that are providing permanent and additional emission reductions equal to the emissions the consumer seeks to neutralise. Our projects fulfil (or even exceed) United Nations standards for international climate change mitigation projects and are independently evaluated by testing institutions officially accredited by the responsible United Nations bodies. Whilst preserving a high degree of environmental integrity, we do not lose sight of cost efficiency. This is reflected in our project portfolio.

Secondly, we acquire carbon certificates suitable for compliance in mandatory emission trading regimes. This approach is chosen in order to meet fluctuations in consumer demand for carbon neutralisation. By acquiring a carbon certificate, we make it unavailable for “justifying” a tonne of carbon dioxide emissions (or the equivalent of other greenhouse gasses in case these are also covered by the system in question) and thereby reduce the overall emissions taking place within the emissions trading regime.

The environmental benefit delivered by the CCF is credible and valid. Consumers will value being offered the choice to neutralise their emissions. And cruising industry partners will benefit from their consumers’ approval and address the reputational risks associated with greenhouse gases in the light of climate change in a meaningful way.

For further information, please contact the author at the Climate Concept Foundation: brandt@climate-concept-foundation.org

By Christopher Brandt, Climate Concept Foundation