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Taking stock: Green concessions programmes


ICF’s vice president, Eliot Lees, and senior consultant, Tod Yankee, consider the reasons why airports should implement green concessions programmes.

Ready or not, airport managers are facing a major behavioural shift in consumers making purchases from retail and food and beverage concessions, which has given rise to a whole new discipline – Green Concessions Programming.

Customers are increasingly making purchasing decisions based on how sustainable a product or service is, with a strong desire to be more environmentally conscious. Research by the Wharton School of Economics has shown that consumers across all generations are placing higher value on sustainability over brand names and are willing to pay more for ‘green’ products and services.

This trend is filtering through to service providers, investors, and airport concessionaire shareholders, who are increasingly intertwining sustainability requirements in investment decisions.

Adding to this pressure, governing bodies are setting ambitious sustainability targets for the aviation industry as a whole. For example, the ACI long-term carbon goal which requires members to reach net zero emissions by 2050.

What is driving change?

The public are becoming increasingly aware of the impact that their purchasing decisions can have on the environment. As a result, they are making a conscious effort to be more sustainable in the way that they live – and purchase goods and services. This behaviour pattern is particularly visible amongst younger generations.

According to the Wharton study, the vast majority of Generation Z (Gen Z) shoppers think that sustainability is more important than brand name when making purchasing decisions. In turn, they are influencing older generations to place more importance on sustainability when buying products and services.

Some 68% of customers, from Baby Boomers to Generation Z, are willing to pay more for sustainable products, an increase of 17% in only two years.

The willingness to spend 10% more on sustainable products went from 40% in 2019 to 83% in 2021, representing a huge opportunity for concessionaires deciding to shift to a more sustainable offer. For example, F&B could provide locally-sourced food or stop selling single-use cutlery.

This shift in consumer behaviour is increasingly being proven as businesses respond to customer demands. The result is a higher engagement in sustainability across organisations and the integration of green decisions across the board.

Slowly, but surely, this is leading to more products that have a reduced environmental impact being made available on the market. More and more, corporate investors are also including environmental, social and governance (ESG) criteria when making investment decisions. This growing trend, called ESG investing, refers to a set of standards that a company’s behaviour will be judged against, and is used by socially conscious investors to screen potential investments.

What does this mean for airports?

One way in which airports can work to reduce their impact on the environment is to engage with concessionaires to operate more sustainably. Green Concessions Programmes encourage airport concessionaires, such as restaurants and retail shops, to adopt sustainable practices and procedures.

These programmes can include requirements for the use of energy-efficient equipment and lighting, recycling and waste reduction targets, water conservation measures, the use of environmentally friendly products, and educating airport customers on the environmental sustainability.

Green Concessions Programmes range from initiatives implemented on an individual concessionaire basis, or part of a broader Green Concession Roadmap with clear performance targets and a holistic strategy as to how to achieve these goals.

San Francisco International Airport (SFO) is leading the industry with its pioneering Green Concessionaire Programme. This programme is piggybacking off a number of city-wide initiatives.

The airport has set the goal of becoming the first triple net zero airport in the world (Zero Carbon, Zero Waste, Zero Net Energy) and has established strict sustainable construction standards, energy saving and electrification requirements for all tenants, including retail and F&B concessionaires, which operate at the airport.

One discrete action is the banning of plastic water bottles at the airport. Only glass, recycled aluminium, or certified compostable materials can be sold. This initiative eliminated more than 4.5 million plastic bottles annually from the disposal stream of the airport – a significant reduction in waste and GHG emissions.

Yet at the same time – the concessionaire and the airport experienced no loss of revenue from the ban – because consumers were willing to pay a higher price to support improved sustainability.

An example of how consumer behaviour and airport targets are influencing airport activities is given from San Diego International Airport (SAN) which has a Green Concession Programme in place. Its programme rewards and recognises airport concessionaires that take action to reduce water and energy use, minimise waste, and educate their staff and consumers on what green business is all about.

Examples of strategies that have been introduced under this scheme include the implementation of LED lighting, energy-efficient equipment, low-flow fixtures, and recyclable food and beverage packaging.

The airport’s Planning and Environmental Affairs and Terminal Operations departments provide support and assistance to concessionaires interested in being certified, and those that sign up for this voluntary programme receive exclusive marketing and promotional support from the San Diego County Regional Airport Authority, as well as one-on-one consulting support for the assessment and implementation of strategies.

In doing so, the concession receives a support service from the airport in return for their engagement in sustainability, and the airport receives support in achieving its campus-wide environmental goals in return for their role as programme lead. Not only this, but consumer preferences for green products and services are being made available, increasing the likelihood of purchases being made, and for the reputation of the airport to increase.

In Europe, many green initiatives are linked to waste management. At London Heathrow Airport, for example, a dedicated on-site R&D team is piloting new methods of recycling plastic. Many types of waste that were previously incinerated, such as food packaging and plastic film, could instead become a series of new products, including staff uniforms, terminal furniture and jet fuel. The recycling unit was created through a partnership between the private sector and University College London. The new process could prevent up to 5,000 tonnes of waste from ending up in landfill every year.

ACI World has also contributed in driving change through establishing long-term carbon goals for airports. These goals, developed with support from consultants ICF and Airbiz, commits ACI member airports across the world to reach net zero carbon emissions by 2050.

The ambitious target is achievable, but airports must reduce emissions from across their operations, and so all activities, including from concessionaires.

How are Green Concession Programmes developed?

Retail and food & beverage concessions represent a major source of solid waste, GHG emissions, and financial impact, and are consequently a focus of leading airports who are implementing Green Concession Programmes to minimise their impact.

The carrot and stick analogy can be used to demonstrate the current pathways for implementing Green Concession Programmes. The ‘carrot’ represents developing programmes for concessionaires to voluntarily commit to take action to reduce their environmental footprint.

For example, this could be the airport aggressively marketing the participants as green concessions or, going one step further, financial incentives could be offered that would reduce rent if the concession purchases 100% renewable electricity and reduces consumption of gas for other purposes by a certain percentage.

The ‘stick’ represents initiatives that are mandated by airports or other organisations, often with negative consequences for not achieving goals. For example, the government-driven ban on single-use plastic straws, stirrers, and cotton buds implemented in England in 2020 which made it illegal for businesses to sell or supply the items.

What are the benefits and concerns around implementing Green Concession Programmes?

Airports considering implementation of Green Concession Programmes will have questions around the associated benefits and drawbacks.

The key benefit of implementing these programmes is that they are playing a central role in reducing the environmental impact of the airport they control. By encouraging concessions to adopt sustainable practices, airports can take a step to reduce energy consumption, waste generation, and emissions.

Additionally, green concession programmes can also promote a culture of sustainability among airport tenants and stakeholders, furthering the goal of reducing the environmental impact of airport operations.

This, in turn, would assist airports in meeting their agreed sustainability targets. For example, ACI have created a long-term carbon goal for their member airports to reach net zero emissions by 2050.

In addition, to achieve the highest-level Airport Carbon Accreditation, a carbon management certification standard endorsed by ACI, airports must demonstrate that they are actively driving sustainability across their operations.

However, emissions reductions are not the only benefit of implementing green concessions programmes as they often have economic benefits. By reducing energy and waste costs, for instance, concessions can save money and become more financially sustainable. In addition, green concessions can attract environmentally conscious customers and improve the reputational image of the airport.

A key concern for both airports and concessions when looking to make changes for environmental benefit will be cost. Whilst some initiatives come with a price tag, it does not necessarily have to be borne by those leading the implementation.

This takes us back to the SFO example in which ICF concluded that consumers would be willing to pay more for a green service at an airport. As reported by First Insight research, there is a significant increase over the last couple of years in a preference for sustainable brands, leading to a willingness of consumers to pay more for sustainable products.

Given the demonstrated shift in which consumers of all generations are expecting more sustainable options and willing to pay more, airports cannot afford to not engage with concessions on this topic.

How can an airport take the first steps to implement a Green Concession Programme?

As airports do not directly provide the concession services, it may seem a challenging and potentially costly task to implement these strategies. However, through creativity, and some level of incentives, airport management teams can indirectly shape the actions of retail and F&B tenants.

For example, airports could take steps to integrate sustainability into the onboarding process of new concessions. This may be through the integration of environmental standards into procurement contracts and purchasing decisions, as well as through workforce education, training and expectation setting once contracts have been signed.

Additionally, to encourage those who are already tenants to reduce their environmental impact, the airport could work to foster collaborative spaces and knowledge sharing opportunities.

Initiating a regular session to bring sustainability to the forefront would likely lead to greater engagement and impact. To encourage the uptake of initiatives further, airports may choose to offer a financial incentive for the implementation of strategies.

It is important to recognise that strategies will vary, and that not every approach will be appropriate for every airport and location.

The key takeaway here is to set realistic goals based on local conditions and the airport infrastructure available. Establishing a baseline and ways of measuring improvement will also be crucial in ascertaining success.

Understanding what is achievable is essential, and progress will only be made if the airport carefully collaborates with tenants and is realistic in their strategic timeframe.

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