ESG Consulting

The global aviation industry contributes just 2.5% of all man-made CO2 emissions but is determined to play its part in addressing the issue of climate change. The International Air Transport Association (IATA) has set a target of achieving net zero by 2050 which the industry will try to reach through a combination of better engine efficiency, emerging technologies like hydrogen and electric-powered aircraft and sustainable aviation fuels.

We expect new regulation to be passed which will require companies to understand and report on their risk exposure across the whole ESG agenda. IBA is uniquely positioned to help aviation companies navigate this large and growing programme of work.

IBA wins Sustainability Technology Award for 2023

We’re delighted to announce that IBA NetZero has once again won the Sustainability Technology Award at the 2023 Aviation 100 Sustainability / ESG Awards.

2022

Voted Appraiser of the Year 2022

90%

Representing our involvement in 90% of ABS structures

4,500+

Transaction and Portfolio Valuations in 2019

35+

Years of Values and Maintenance Data

The Aviation Conversation - ESG

In this edition of our popular Aviation Conversation series, IBA's Phil Seymour, Jeni Stanley and Danny Thurtle discuss the challenges faced by the aviation industry as it adapts to the ever changing world of ESG regulations and the road to carbon net zero.

Sustainable finance

Investors are increasingly integrating environmental, social and governance (ESG) criteria into their investment decisions. IBA's steeped in aviation and finance expertise, putting it in pole position to support issuers in the aviation sector. IBA can act as a Second-Party Opinion (SPO) service for green and sustainability bonds.

Emissions monitoring and forecasting

IBA helps Corporate Sustainability, Finance and Investor Relations departments within airlines to monitor and report their emissions and to compare them against the industry. We partner with lessors to monitor their aircraft portfolio's carbon footprint and evaluate how it compares against industry peers. IBA can also forecast scenarios based on future fleet profiles taking into account use of Sustainable Aviation fuels.

ESG Ratings

IBA provides ESG ratings for major global airlines , scoring them according to environmental criteria such as carbon emissions, social factors like diversity and governance standards including board independence. In contrast to other ESG ratings providers, IBA's ranking is exclusively focused on providing the highest quality evaluation specifically for the aviation sector. We've established the benchmark. Comparing ESG ratings between different sectors is of limited value because they are typically not interchangeable. Aviation is vital for global economic growth. IBA's ranking powers stakeholders to reach the best informed decision available within the aviation sector.

ESG Strategy

We can boost your ESG strategy. Our in-depth industrial knowledge fuels our ability to devise an ESG strategy that's challenging yet realistic. IBA will develop the plan, the internal and external communication policy, the regulatory context and the tools to track ongoing performance. If help's required to implement an ESG programme, we'll partner with transformation experts to give you the delivery assurance you need.

How are IBA supporting the aviation industry to navigate the journey to Net Zero?

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New technology

Perhaps you're considering investing in new technology. We can give you expert advice. Our experienced engineers not only understand gas turbine engines, they're also skilled at evaluating electric aircraft including battery technology.

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Navigating Aviation Emissions Regulations

Articles

Navigating Aviation Emissions Regulations

Written by IBA's ESG Consulting team. The aviation industry is undergoing significant regulatory changes to reduce carbon emissions and transition towards sustainability. In the ever-evolving landscape, three major directives stand out for their potential to shape the industry's future: the EU Emissions Trading System (EU ETS), Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) and Refuel EU. These regulations, while complex, offer significant opportunities for the aviation sector to address its environmental impact and transition towards a more sustainable future. EU Emissions Trading System (EU ETS) From Cap-and-Trade to Carbon Cost The EU ETS, a cornerstone of European environmental policy, operates on a cap-and-trade system, wherein airlines must surrender allowances for their carbon emissions. Over the years, the EU ETS has undergone gradual refinement to strengthen its effectiveness in curbing aviation carbon emissions. One notable development is the gradual reduction of allowances now equating to the right to emit one ton of CO2 annually. From 2026, airlines will face the full cost of emitting carbon, as free allowances taper down to zero on intra-EU flights where the cap has been steadily above 80% since 2012. This shift is anticipated to impact airlines' bottom lines significantly, potentially leading to increased ticket prices. Morgan Stanley predicts a substantial rise in carbon costs, reaching €120 in 2027 and €135 per tonne by 2030. Additionally, there are ongoing discussions about including non-CO2 emissions in the ETS framework, which could further alter operational dynamics within the industry. CORSIA A Global Offset Mandate Designed to offset international flight emissions, CORSIA was developed under the International Civil Aviation Organization (ICAO) and sets baseline levels for emissions exceeding 85% of 2020 levels. While still in the voluntary phase, all regions have breached the baseline as of the start of this year. The mandatory phase of CORSIA is set to begin in 2027, with individual airlines becoming accountable for their emissions by 2030. The convergence of CORSIA and EU ETS makes European carriers unique, facing heightened offset obligations. While CORSIA aims to create a unified approach to offsetting aviation emissions on a global scale, the EU ETS focuses specifically on regulating emissions within the European Union. This disparity of both frameworks may lead to increased costs for airlines operating within the EU, prompting questions about the distribution of financial burdens in the industry. Refuel EU Paving the Way for Sustainable Aviation Fuel Part of the Fit for 55 package, and only just legislated in October 2023, Refuel EU’s primary goal is to address the EU's target of reducing net greenhouse gas emissions by at least 55% by 2030 under the three-strand regulation. The first strand aims to reduce tankering by mandating 90% of yearly fuel must be picked up at an EU airport. This ensures that fuel is being picked up when required rather than at a cheaper price so airlines are not carrying extra weight by picking up cheaper fuel in countries outside of the EU. The second strand of Refuel EU promotes sustainable aviation fuel (SAF) usage along with requirements for aviation fuel suppliers to blend 2% SAF and kerosene from 2025, increasing to 70% by 2050. IATA anticipates a surge in global SAF production, reaching 0.5% of global fuel consumption this year. For more on how SAF reduces aviation emissions and its viability, read here. The third and final strand is the need for airports to develop the infrastructure needed to support SAF delivery detailed in the second strand. This is expected to be a major focus area for airlines this year. The implementation of Refuel EU underscores a global shift towards sustainability, with significant progress observed in SAF production and distribution, particularly in the APAC region. Singapore has revealed its SAF blending objectives slated for implementation in 2026, alongside Airbus and Total Energy's collaboration to establish a sustainable hub in the country. Meanwhile, in Australia, LanzaJet has unveiled its partnership with Jet Zero, aiming to establish the first Alcohol-to-Jet (ATJ) plant in the region, converting ethanol into SAF. Partnerships and agreements, such as those between IAG and Twelve, signal increasing momentum towards incorporating SAF into aviation operations. Towards Net Zero: A Collective Effort While these regulations mark significant strides towards achieving net-zero aviation emissions by 2050, challenges remain. The aviation industry must maintain momentum through sustained collaboration and innovation. This includes securing off-take agreements for SAF, investing in production infrastructure, and advocating for supportive government policies. Crucially, achieving net-zero emissions requires collective action across all sectors of the industry. From major airlines to smaller carriers, everyone must play a role in driving sustainability initiatives forward. By embracing this collective responsibility and working in tandem with policymakers, energy suppliers, and financial institutions, the aviation sector can pave the way towards a greener future.

IBA’s Webinar: A Progress Update – The Journey to Net Zero

Webinars22Mar 2024

IBA’s Webinar: A Progress Update – The Journey to Net Zero

In our latest aviation ESG update webinar of 2024, IBA President Phil Seymour, along with Jeni Stanley, ESG - Manager, and industry guest speaker Haldane Dodd from the Air Transport Action Group examined the latest regulations, industry developments, and global influences and highlight the critical issues on the journey to decarbonise aviation. Summary Over the hour, our panel discussed the industry's climate goals, including reducing emissions by half of 2005 levels by 2050, and the steps outlined in the Waypoint 2050 report to achieve this. The role of governments and the financial community in achieving these goals was also discussed, with an estimated $1.5 trillion needed in capital investment for sustainable aviation fuel (SAF) production over the next 25 years. The webinar also touched on the impact of political changes and regulations on the industry, the potential impact on ticket prices, and the industry's efforts towards sustainability, including the use of SAF and future technology pathways such as Carbon Capture and Storage (CCS) and hydrogen propulsion. Despite these efforts, a poll revealed that most participants believe the industry will not meet the net zero target by 2050. "The challenge of reaching net zero by 2050 requires continuous effort from all parts of the sector, not just the big airlines. The industry is exploring future technology pathways such as Carbon Capture and Storage and hydrogen propulsion. However, the industry also needs the support of governments, the energy industry, and the finance industry to achieve its sustainability goals." The webinar also reintroduced our ESG Consulting team and IBA NetZero Reporting, the latest addition to IBA NetZero for reporting Scope 3 aviation emissions. Click the button below to watch on-demand Watch On-demand

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Related content

Navigating Aviation Emissions Regulations

Articles

Navigating Aviation Emissions Regulations

Written by IBA's ESG Consulting team. The aviation industry is undergoing significant regulatory changes to reduce carbon emissions and transition towards sustainability. In the ever-evolving landscape, three major directives stand out for their potential to shape the industry's future: the EU Emissions Trading System (EU ETS), Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) and Refuel EU. These regulations, while complex, offer significant opportunities for the aviation sector to address its environmental impact and transition towards a more sustainable future. EU Emissions Trading System (EU ETS) From Cap-and-Trade to Carbon Cost The EU ETS, a cornerstone of European environmental policy, operates on a cap-and-trade system, wherein airlines must surrender allowances for their carbon emissions. Over the years, the EU ETS has undergone gradual refinement to strengthen its effectiveness in curbing aviation carbon emissions. One notable development is the gradual reduction of allowances now equating to the right to emit one ton of CO2 annually. From 2026, airlines will face the full cost of emitting carbon, as free allowances taper down to zero on intra-EU flights where the cap has been steadily above 80% since 2012. This shift is anticipated to impact airlines' bottom lines significantly, potentially leading to increased ticket prices. Morgan Stanley predicts a substantial rise in carbon costs, reaching €120 in 2027 and €135 per tonne by 2030. Additionally, there are ongoing discussions about including non-CO2 emissions in the ETS framework, which could further alter operational dynamics within the industry. CORSIA A Global Offset Mandate Designed to offset international flight emissions, CORSIA was developed under the International Civil Aviation Organization (ICAO) and sets baseline levels for emissions exceeding 85% of 2020 levels. While still in the voluntary phase, all regions have breached the baseline as of the start of this year. The mandatory phase of CORSIA is set to begin in 2027, with individual airlines becoming accountable for their emissions by 2030. The convergence of CORSIA and EU ETS makes European carriers unique, facing heightened offset obligations. While CORSIA aims to create a unified approach to offsetting aviation emissions on a global scale, the EU ETS focuses specifically on regulating emissions within the European Union. This disparity of both frameworks may lead to increased costs for airlines operating within the EU, prompting questions about the distribution of financial burdens in the industry. Refuel EU Paving the Way for Sustainable Aviation Fuel Part of the Fit for 55 package, and only just legislated in October 2023, Refuel EU’s primary goal is to address the EU's target of reducing net greenhouse gas emissions by at least 55% by 2030 under the three-strand regulation. The first strand aims to reduce tankering by mandating 90% of yearly fuel must be picked up at an EU airport. This ensures that fuel is being picked up when required rather than at a cheaper price so airlines are not carrying extra weight by picking up cheaper fuel in countries outside of the EU. The second strand of Refuel EU promotes sustainable aviation fuel (SAF) usage along with requirements for aviation fuel suppliers to blend 2% SAF and kerosene from 2025, increasing to 70% by 2050. IATA anticipates a surge in global SAF production, reaching 0.5% of global fuel consumption this year. For more on how SAF reduces aviation emissions and its viability, read here. The third and final strand is the need for airports to develop the infrastructure needed to support SAF delivery detailed in the second strand. This is expected to be a major focus area for airlines this year. The implementation of Refuel EU underscores a global shift towards sustainability, with significant progress observed in SAF production and distribution, particularly in the APAC region. Singapore has revealed its SAF blending objectives slated for implementation in 2026, alongside Airbus and Total Energy's collaboration to establish a sustainable hub in the country. Meanwhile, in Australia, LanzaJet has unveiled its partnership with Jet Zero, aiming to establish the first Alcohol-to-Jet (ATJ) plant in the region, converting ethanol into SAF. Partnerships and agreements, such as those between IAG and Twelve, signal increasing momentum towards incorporating SAF into aviation operations. Towards Net Zero: A Collective Effort While these regulations mark significant strides towards achieving net-zero aviation emissions by 2050, challenges remain. The aviation industry must maintain momentum through sustained collaboration and innovation. This includes securing off-take agreements for SAF, investing in production infrastructure, and advocating for supportive government policies. Crucially, achieving net-zero emissions requires collective action across all sectors of the industry. From major airlines to smaller carriers, everyone must play a role in driving sustainability initiatives forward. By embracing this collective responsibility and working in tandem with policymakers, energy suppliers, and financial institutions, the aviation sector can pave the way towards a greener future.

IBA’s Webinar: A Progress Update – The Journey to Net Zero

Webinars22Mar 2024

IBA’s Webinar: A Progress Update – The Journey to Net Zero

In our latest aviation ESG update webinar of 2024, IBA President Phil Seymour, along with Jeni Stanley, ESG - Manager, and industry guest speaker Haldane Dodd from the Air Transport Action Group examined the latest regulations, industry developments, and global influences and highlight the critical issues on the journey to decarbonise aviation. Summary Over the hour, our panel discussed the industry's climate goals, including reducing emissions by half of 2005 levels by 2050, and the steps outlined in the Waypoint 2050 report to achieve this. The role of governments and the financial community in achieving these goals was also discussed, with an estimated $1.5 trillion needed in capital investment for sustainable aviation fuel (SAF) production over the next 25 years. The webinar also touched on the impact of political changes and regulations on the industry, the potential impact on ticket prices, and the industry's efforts towards sustainability, including the use of SAF and future technology pathways such as Carbon Capture and Storage (CCS) and hydrogen propulsion. Despite these efforts, a poll revealed that most participants believe the industry will not meet the net zero target by 2050. "The challenge of reaching net zero by 2050 requires continuous effort from all parts of the sector, not just the big airlines. The industry is exploring future technology pathways such as Carbon Capture and Storage and hydrogen propulsion. However, the industry also needs the support of governments, the energy industry, and the finance industry to achieve its sustainability goals." The webinar also reintroduced our ESG Consulting team and IBA NetZero Reporting, the latest addition to IBA NetZero for reporting Scope 3 aviation emissions. Click the button below to watch on-demand Watch On-demand

IBA's Sustainability Watch: March 2024

Articles

IBA's Sustainability Watch: March 2024

Environmental, Social, and Governance (ESG) issues are now seen as a key risk to aviation investments, and authorities worldwide are demanding more transparency and stricter reporting standards. It’s never been more important to understand the pathways to net zero emissions and their real-term impacts on all key players across the industry. Each month, IBA’s ESG Consulting team share key insights and the latest news from the growing world of sustainable aviation.