1. Environmental, Social & Governance
Sustainability in aviation has been typically driven by governments and environmental organizations calling for fuel efficiency and lower GHG emissions. While reducing a major operating cost was a key driver for change, few airlines effectively embraced sustainability as an integral part of their ethos and strategy. But things are changing as “next generation” travelers increasingly seek more sustainable air travel options, forcing key industry players to revisit their purpose and find new mechanisms to meet this demand.
Developing a sustainability strategy now will be a fundamental step for airlines to better position their brands and gain consumer trust compared to those that leave the issue on the sidelines. A big challenge for these companies—and across every industry—will be blending business goals with sustainability goals, as a recent Egon Zehnder study points out. In aviation, it will take commitment and an entire ecosystem shift, including the adoption of more efficient technology, but it’s worth it both from an environmental and business proposition standpoint.
Fortunately, airlines are taking action to address environmental concerns. Some measures include using Sustainable Aviation Fuels; reassessing supply chain; investing in carbon offsets; multimodal transportation for better flight planning; reforming air traffic management technologies with improved operations and procedures; reducing or eliminating single-use plastics, among others. United Airlines, for instance, pledged to eliminate greenhouse gas emissions by 2050; SAS is ending duty-free sales to reduce aircraft weight for lower fuel consumption and to reduce emissions; British Airways established a sustainable alcohol-to-fuel initiative; and Air New Zealand committed to reducing single-use plastic waste inflight and more.
Beyond sustainability, Diversity, Equity & Inclusion will also play a critical role in the race of battling and winning future crises, not only with the airlines’ employees but also with their brand perception vis-a-vis customers and partners. Industry players will prioritize their basic needs of adjusting to new working styles, resilience, growth, and productivity, but those taking bolder measures in creating equilibrium at the top-level will be better positioned.
Leadership Implications:
Embracing ESG will require a shift in mindset and behavior from the top-down. Airline CEOs need to formalize their ESG plans by building a dedicated and empowered function. They will also need to hire and develop diverse talent that can drive the agenda consistently and embed meaningful cross-cutting KPIs to properly target, measure, and monitor ESG progress. Leadership from the top is key: The sustainability agenda should be driven simultaneously and consistently by the Executive Committee and the board of directors, with the CEO taking a personal commitment to drive, support and report on the airline’s sustainability progress. Airline leaders will need to craft a compelling, sincere, and inspiring ESG strategy, commit to its execution with clear initiatives, and turn the external pressures into actionable internal initiatives.
