Airline Corporate Social Responsibility (CSR) Reporting For The Eco-conscious Travelers
In just over a century, commercial aviation has become the fastest, safest, and most far-reaching mode of transportation in the world. According the Air Transport Action Group, a not-for-profit association that represents various sectors in the airport industry, over 3.5 billion people flew on the world’s airlines. As the global demand for air travel continues to grow, it is imperative that airlines address the significant impact of their operations on the environment. These impacts range from CO2 emissions to waste management and pollution in water bodies. In 2015, approximately 781 million tonnes of CO2 were produced by flights worldwide.
The good news is that airlines are cognizant of their environmental footprints and are taking proactive measures to enhance corporate sustainability. One such measure is to disclose historical track records along with current initiatives that make the operations “greener.” Furthermore, the reports allow environmentally conscious travelers to scrutinize the carriers’ policies and in turn reward the airlines with the best practices. Although almost all of the major carriers publish some form of corporate sustainability report, there remains some industry-wide deficiencies.
The lack of reporting standards makes it difficult to compare one airline to another. When it comes to environmental reporting, airlines’ reports contain great variation. However, there are non-profit organizations that are making a push for standardized sustainability reporting like the GRI Standards and the Sustainability Accounting Standards Board (SASB). JetBlue, a New York-based carrier, signed on to the SASB initiative in its 2016 annual report. Increased participation in the SASB from major airlines will likely result in greater transparency of airlines’ environmental impacts and more meaningful comparison.
Another potential improvement is the alignment of CSRs with overall corporate financial goals. According to the PWC report, many of the largest airlines publish a stand-alone CSR report separate from the annual financial report. However, the airline executives’ business decisions oftentimes have tremendous impact on the environment. For example, the newer aircrafts all incorporate the latest technologies to decrease fuel burns and lessen harmful emissions into the atmosphere. On the one hand, airlines can shave off significant fuel costs by upgrading their fleets. On the other hand, a large capital expenditure is required to purchase such aircrafts. Small body planes like the Boeing 737 have a unit cost of approximately $60 million, whereas wide body aircrafts like the Boeing 777 entail over a $300 million price tag. As a result, many international airlines have been slow to replace their fleets and make upgrades that have a lesser impact on the environment. Delta, Air Canada, and United currently have the oldest average planes at 17, 14.2, and 14.1 years old, respectively. By combining non-financial CSR data with the numerical metrics in one report, an airline can offer eco-conscious travelers more clarity into their operations.
Overall, airlines have made great progress in their environmental efforts and related disclosure, but there is still improvement to be made. As the number of air travelers grow, the corresponding increase in environmental impacts place even greater burdens on airline corporate leaders to invest in CSR initiatives. At the same time, eco-conscious consumers can utilize the CSR reports to evaluate each carrier’s progress and reward the most environmentally progressive airlines with their patronage.
By: Leo Liu