Finnair's pursuit of excellence pays off with entry into global climate change business leadership index
Finnair Airbus A330
Tue 30 Oct 2012 – With a rating of 92 out of 100, Finnair has scored “excellent” in the newly released Carbon Disclosure Project (CDP) Nordic Report 2012, making it one of the annual survey’s top companies as well as the first airline to be placed in CDP’s Carbon Disclosure Leadership Index (CDLI). Finnair has participated since 2007 and in recent years has seen its rating climb to its present industry-leading level from 61 in 2010 and 78 in 2011. CDP compiles the world’s only global climate change reporting system, gathering company environmental data on behalf of 655 institutional investors across the world that manage around $78 trillion in assets. More than 4,000 organisations – sadly not many in the aviation sector – in 72 countries measure and disclose their GHG emissions, water management and climate change strategies. Other air transport-related companies in the Nordic index include SAS, which earned a rating of 69, and Copenhagen Airports achieving a rating of 58.
“A placing in the CDLI is great recognition of our longstanding work in promoting energy-efficient flying,” said Mika Vehviläinen, Finnair’s CEO. “In the aviation business, a very energy and capital intensive sector, efficiency is essential for creating shareholder value. For us, reducing carbon emissions in all our operations is also good business. As fuel accounts for almost one third of our annual cost base, every drop saved translates into an appreciable gain for the company.”
Founded in 2000, CDP was described by the Harvard Business Review as the “most powerful green NGO you’ve never heard of”. Its aim is to help move climate change and energy efficiency onto the business radar and into mainstream business thinking. Its approach has also helped the investment community to become more aware of the risk to their portfolios and act to achieve more sustainable and strong shareholder returns.
According to CDP’s Communications Manager, Catherine von Altheer, company responses to its annual questionnaire are reviewed, analysed and rated according to their climate change transparency, with the best disclosers entering the CDLI. CDP then assesses companies according to the scale and quality of their emissions reductions and strategies, and ranks these according to performance bands: the best performers enter CDP’s Carbon Performance Leadership Index (CPLI).
“The indices are used by investors to assess corporate preparedness for national or international emissions regulation and to guide investment decisions,” she said. “Finnair achieved a 92 for disclosure, placing them within the Nordic 260 CDLI, and a performance band B, which is good although not quite enough to make it into the CPLI.”
Commending Finnair on its achievement, Steven Tebbe, Managing Director for CDP Europe, commented: “Given the nature of the aviation business, it is particularly difficult to find low carbon alternatives. We therefore welcome the leadership that Finnair has taken on this issue, not only within its sector but even compared to other industries. In order to decouple economic growth from GHG emissions growth we need to accelerate innovation.”
Apart from Finnair and SAS, other airlines reporting their climate change strategy activities to CDP include Southwest Airlines, International Airlines Group (parent company of British Airways and Iberia), Deutsche Lufthansa and LAN Airlines, the former two making their reports publicly available online through the CDP website and providers such as Bloomberg and Thomson Reuters. A number of airfreight and logistics companies also participate, including FedEx and UPS.
Finnair says by 2017 it is committed to reducing its emissions per seat by 24% from 2009 levels, which since 1999 have already been reduced by a quarter. According to its latest CSR report, the airline suffered a blip in its continuous year-on-year improvement in revenue passenger traffic and payload fuel efficiency in 2011, although it managed to reduce emissions from 85.05 grams per available seat kilometre in 2010 to 84.41 in 2011. In line with an increase in traffic, fuel consumption increased from around 705,000 tonnes in 2010 to over 800,000 tonnes last year, representing just over 2.5 million tonnes of CO2.
The reduction in overall fuel efficiency is largely due to a fall in load factors in 2011 but the airline believes current fleet replacement, in particular with new Airbus A330s, will put it back on course. Last month, Finnair announced it would equip five new Airbus A321 extended range aircraft on order for delivery in September 2013 with IAE V2533-A5 engines. The new aircraft are expected to be around 5% more fuel efficient than the Boeing 757 aircraft they are due to replace.
“A modern fleet is an investment in Finnair’s future,” said Kati Ihamäki, the airline’s VP Sustainable Development. “Especially in the emissions trading era, sourcing decisions like this have an appreciable effect on our bottom line, not to mention savvy and well-informed customers looking for greener choices when flying.”
Under its ‘weight watchers’ initiative to improve fuel efficiency and help meet the emissions reduction targets by minimising aircraft weight, Finnair has just selected Nordisk Aviation Products to provide its wide-body aircraft with lightweight air cargo containers (ULDs). The UltraLite AKE containers weigh 55kgs, about 25kgs lighter than Finnair’s current ULDs. They are expected to save around 800 tonnes in fuel and 2,500 tonnes of CO2 annually.