ESG, What Does it Mean for a Flight Department?

ESG, or Environmental, Social, Governance, is a set of standards for a company’s operating behavior used by employees, lenders, customers, insurance providers, and regulators to evaluate a company’s good stewardship in society. ESG is becoming increasingly important to organizations worldwide, and the aviation industry is no exception. Varying groups are interested in ESG initiatives for a variety of, sometimes differing, reasons. Potential employees may value the company’s impact to the environment or if the company invests in the well-being of their employees. Investors and insurance brokers are interested in the risk of an organization, and having an ESG program in place may help mitigate nonfinancial areas of potential exposure. Lastly, consumers are using ESG programs as a differentiator when choosing their products. A joint study from McKinsey and NielsenIQ examined sales growth for products that claim to be environmentally and socially responsible, “products making ESG-related claims averaged 28 percent cumulative growth over the past five-year period, versus 20 percent for products that made no such claims.” 

 In some larger organizations, ESG initiatives are set by a department that specifically oversees the organization’s overall approach to these standards. But what can a flight department do if they don’t have a centralized ESG department that manages it? 

Environmental 

Environmental impacts—mainly carbon dioxide and other greenhouse gases—from operations are likely the main focal point for flight departments. With the heightened scrutiny that the industry faces, the need for an impactful and defensible sustainability approach is even more critical. While aviation is a small contributor to global carbon dioxide emissions, the industry has set an ambitious path to reduce its carbon emissions to net zero beginning in just a few years. As such, flight departments and other operators are under increasing pressure to reduce their environmental impact.  

The first step to address this is to measure your environmental footprint and learn the source of emissions. In most cases, flight activity will generate most of the department’s emissions and environmental impact. A comprehensive strategy can be developed to address these impacts using the most effective methods. Some examples of how operators can minimize their environmental impacts are by investing in fuel-efficient aircraft, using sustainable aviation fuel, acquiring verified carbon offsets, and reducing the energy consumption of facilities. 

A strong strategy in addressing the environmental impacts of a flight department can also have effects on the other components of ESG. For example, some carbon credit projects, such as the efficient cookstoves in African nations, not only bring the environmental benefits of using less fuel (wood) through improved efficiencies over an open fire pit but also bring social benefits in the form of better health and safety to the stove users. Thus, addressing more than one of the 17 UN’s Sustainability Goals. 

Social 

ESG factors can also have a significant social impact on flight departments. Companies committed to social responsibility are more likely to attract and retain top talent. A necessity for attracting pilots, cabin attendants, and maintenance staff— especially in today’s highly competitive labor marketplace. 

Flight departments can improve their social impact by engaging with local communities, supporting local charities and social programs, and investing in the well-being of their employees. By doing so, flight departments can create a positive image for themselves, build trust with stakeholders, and enhance their reputation. 

Governance 

Good governance is essential for flight departments to ensure ethical behavior, accountability, and transparency. The inherent nature of aviation, a highly regulated industry, makes regulatory governance an essential part of everyday operations. However, just because the flight department adheres to operational regulations, doesn’t minimize the need to ensure that other areas of governance are neglected. Flight departments can improve their governance practices by implementing effective risk management, ensuring compliance with regulations—especially pertinent for evolving ETS and CORSIA regulations—and establishing strong internal controls. By doing so, flight departments can mitigate risks, improve decision-making processes, and increase accountability. 

Companies with robust governance structures are less likely to face legal and reputational risks, making them more attractive to investors, lenders, and insurance providers. 

ESG factors have become increasingly important to flight departments as they seek to reduce their environmental impact, enhance their social responsibility, and improve their governance practices. By adopting sustainable practices, engaging with local communities, and implementing effective governance structures, flight departments can not only meet their ESG responsibilities but also create long-term value for their stakeholders, community, and the industry.