Green Investing & ESG
(Environment, Social & Governance )
Lots of Airlines are Leading the ESG Way
Let’s start with a practical exercise, shall we?. Because we believe the best entry point into the Green Investing subject is through action, we want to take a look at an Airline who – according to Industry Peers – is doing ESG and Green Investing the best.
Hopefully, along the way, the various authorities and controls might make sense against the results achieved.
Winners of the prestigious Airline Strategy Award for Environmental, Social and Governance 2022.
A Judging panel chock full of industry CEO’s and experts in the field decided that United should take the prize.
What Scott Kirby is doing in this space in the US environment is more adventurous and risky than carriers in regions where the customer demands it
ESG in Action
Before we get to the “why”, this quote deserves recognition (the Judge was not named in the published article). But three words need repeating here. Adventurous, Risky and Demand.
If we are to achieve our ESG goals, we will need all of these.
How did United win?
Here's How
Scott Kirby was appointed CEO in 2020. United is the second largest airline in the world (by fleet size) operating at one of the world’s busiest airports. The judging panel’s decision was based on the following actions:
- In December United invested in 1PointFive. A Carbon-capture and sequestration specialist. 1.5 degrees being the maximum temperature allowable at the UN level. You can read more at our WingZer0 page.
- In February 2021 United announced an agreement with Archer Aviation for their new eVTOL all-electric aircraft
- United launched the “Eco-skies Alliance” a program that allows corporate clients and partners invest in SAF (Sustainable aviation fuel)
- In June 2021 United created United Airlines Ventures, a new investment company dedicated to clean-energy technologies. If you have an idea in the sustainability space, you can go there right now and submit it.
- Besides Archer, UAV invests in other platforms such as Alder Fuels, Fulcrum Bioenergy, Heart Aerospace and ZeroAvia (who will retrofit United regional Turboprops with hydrogen powered electric engines)
- In October 2021 United sponsored 50 minority-owned businesses in the Denver area alone.
- In early 2022 United announced it would provide more than USD $500,000 in grants to golf programs at historically black colleges.
- Scott Kirby was commended personally for his leadership around the COVID-19 pandemic especially the United vaccination program.
Sustainability is a Journey we have been on for 50 years.
It is, perhaps, the end of the beginning...
ESG Regulatory Authority
If you are an investment (or related) company, then ESG means ratings. If you are a company operating in the Aviation or Aerospace sector, such as an Airline, Airport, Lessor, or Bank then these are the Authorities who formally manage the ESG processes you need to be concerned with:
- MSCI – Morgan Stanley Capital Investment. Powerful rating agency for investors, banks and hedge funds that own and invest in aircraft and engines.
- UNPRI – United Nations Principles for Responsible Investment. Great articles and resources on ESG specific to Aviation.
- CSRD – Corporate Sustainability Reporting Directive. From 2023, all EU companies must include a sustainability report as part of their annual filings. The goal is to drive investment in a more economical direction.
- GFANZ Initiative – Glasgow Financial Alliance for Net Zero. Specifically for the Financial sector, this initiative brings “sustainable banking” under one roof.
- The UN also has its own Banking Alliance, under the UNPRI banner.
- RMI – SABA is the sustainable Aviation Buyers Alliance. SAF (sustainable Aviation fuel) is the focus, but it should evolve to include all innovations around aviation energy requirements.
- The Poseidon Principles have been a sustainability framework in shipping. There is a lot of support for these principles to be mapped onto the aviation sector.
