Sustainable Solutions for Reducing Aviation Carbon Footprints: A Win-Win for Aviation Industry Stakeholders
The global aviation industry has been undergoing a significant transformation as society becomes increasingly concerned about the environmental impact of air travel. With growing awareness of climate change and the need for sustainable practices, the aviation sector as well as many others, strives to reduce its carbon footprint.
In this short article, we will examine the challenges that the environmental, social, and governance (ESG) aspects face and explore how the insurance sector can offer a useful perspective and support, thanks to the help of one of the industry’s leading experts, Rachel Barrie, Group Chief Executive, Global Aerospace.
The Societal Shift Towards Considering Aviation’s Carbon Footprint
In recent years, there has been a noticeable change in societal attitudes towards air travel and its impact on the environment. Passengers are increasingly conscious of the carbon emissions associated with their flights and are seeking ways to reduce their carbon footprints. According to the International Air Transport Association (IATA), Aviation accounts for approximately 2% of global C02 emissions (however, when considering the industry’s total impact, including non-C02 emissions such as nitrogen oxides (NOx), it is estimated to be higher.) This has led to a rise in eco-conscious travel choices, such as carbon offset programs and the preference for airlines with lower emissions. The aviation industry has recognised this shift and is actively exploring sustainable solutions to meet the growing demand for greener air travel.
1Changes from other European countries such as Schiphol Airport, are set to see a decrease in their flight capacity in a bid to cut both air and noise pollution down. With the Dutch Government deciding to limit the number of flights entering the airport, these changes are set to start in November 2023. 2 France have also recently signed a short haul flight ban on any journeys that can be serviced by rail in less than 2.5 hours. This is in a bid to encourage its people to take the train instead.
Insurance Providers Promoting Sustainability
Insurance companies play a fundamental role in supporting the future of the aerospace industry. As risk assessors, insurers have a vested interest in mitigating potential losses arising from aircraft operations. By supporting sustainable initiatives, insurance companies can help the next phase of aerospace development achieve higher levels of sustainability. Insurers can collaborate with aviation stakeholders to develop risk management strategies that prioritise sustainability and promote responsible operations throughout the industry.
Taking Flight with United Insurance Brokers we spoke to Rachel Barrie, Group Chief Executive of Global Aerospace, together, we explore the ESG landscape in aviation, tackling challenges and envisioning a greener future.
“In your opinion, what are the most promising future developments or trends in sustainable aviation? How do you see the industry evolving in the next decade?
The development of new technology has accelerated rapidly over the last decade and Global Aerospace is excited to be able to offer innovative insurance solutions to allow new and sustainable technologies to become a reality. We are seeing advancements that are promising to improve emissions, fuel burn and noise footprint. Engine manufacturers have developed new power sources that promise up to 20% less fuel burn and a 50% reduction in noise.
The aviation industry will continue to advance environmentally friendly technologies and has taken great steps forward to become cleaner, quieter, and smarter. We work with clients who are developing new technologies such as hypersonic jet engines, electric-powered take-off and landing, and biofuels and Global will continue to develop risk management solutions as these technologies evolve.”
“How important is public awareness and consumer demand for sustainable air travel in driving change within the aviation industry?
Many of our clients are developing and adopting green technology and they advise us it has become an area of focus for all stakeholders, be it customers, suppliers, employees, or shareholders. Inevitably, all parts of the industry will be impacted and the reliance on fossil fuels that the industry currently so heavily depends on will have to change. At what speed they will be fully implemented is yet to be determined.
Government regulators and the travelling public have demanded that all sectors be it manufacturers, suppliers, operators, or infrastructure, make it a priority to become more sustainable. As a result, our industry has embraced the initiative in terms of complying with regulations. The major players in the field have green policies in place and can continue to influence suppliers to keep pace with these initiatives.”
Collaborative Efforts for a Sustainable Future
Creating a sustainable aviation industry requires collaboration between insurers, airlines, manufacturers, and regulatory bodies. Insurers can actively engage with aviation stakeholders to develop industry-wide sustainability standards, risk assessment frameworks, and guidelines for environmentally friendly practices. By sharing expertise, insurers can contribute to the development of sustainable aviation policies and initiatives that drive positive change.
With more than 150 data vendors currently available according to a KPMG 3 report back in February 2020, these new vendors offer ESG performance measures which could be a potential route to help industry stakeholders account for their impact, allowing reports that could incentivise help towards achieving lower emissions. With any market-leading innovation, there will be, of course, pushback. Where there is a lack of research or regulation many can become frustrated.
Conclusion
The aviation industry is transforming as environmental considerations take centre stage. In 2021, the Science Based Targets Initiative (SBTi) announced that only 20% of G20 companies have science-based climate targets. As of right now, there are currently no agreed-on standards for measuring aircraft emissions or establishing who should get what credit for reducing them. Insurance companies have an opportunity to advocate for sustainable practices in the aerospace industry. By 2050, net aviation carbon emissions are predicted to be half of what they were in 2005, (according to Air Transport Association (IATA).
Through collaborative efforts and a shared commitment to green and next-generation technologies, insurers and aviation stakeholders can help pave the way for a greener future in air travel.
1 Netherlands to cap Schiphol capacity from next year to lower pollution
2 France signs short haul flight ban in law
3 Sustainable investing: fast-forwarding its evolution
