The aviation industry wants to mitigate its environmental impact, but fliers will pay more in time

Speaking ahead of the International Society of Transport Aircraft Trading (ISTAT) Sustainability Symposium, in association with Airfinance Journal and PwC in Dublin on 4 May, Dick Forsberg Senior Aviation Finance Consultant at PwC Ireland said: "ESG and sustainability are critical challenges for the aviation industry, which is deeply committed to mitigating its environmental impact. The extensive and growing global scale of commercial aviation means that developing and delivering mitigants for its environmental impact will extend over decades rather than years. Sustainable fuels are being developed and scaled to become a crucial bridge for the inevitable technology gap between current fossil-fuel powered aircraft and future generations of electric, hydrogen and other propulsion options. The level of research and investment in these green alternatives has continued to increase throughout the pandemic and a number of high-profile initiatives are already being adopted by airlines, lessors and original equipment manufacturers (OEMs)*.

"However, embedding ESG and sustainability will carry a financial cost as new technologies are developed. While the additional cost will initially be borne primarily by industry stakeholders, they will trickle down to customers over time, leading to more expensive air fares in the future.

"Financiers and investors are also placing increasing weight on the environmental credentials of their customers and business partners, with underperformance potentially resulting in reduced access to funding and/or higher pricing. For example, PwC's Global Investor survey revealed that 49% of global investors would sell their investment if a company could not demonstrate that it is taking sufficient measures to address ESG issues".

Also addressing the conference, Yvonne Thompson, Aviation Finance Leader at PwC Ireland said: "The industry continues to face multiple challenges, not least a turbulent economic landscape, global political tensions and spiraling fuel costs in addition to the need to reduce carbon emissions and reach net zero. Having begun to recover from COVID-19 and despite the war in Ukraine, we see an industry that is resilient, responding to consumer preferences and one that will return to renewed growth patterns, delivering on its purpose to society. Aviation financiers are, however, no longer answerable just to shareholders, but to a new set of stakeholders: customers, employees, suppliers, communities, the media and regulators. These broader and more vocal groups are increasingly interested in how ESG drives corporate performance. ESG gets to the heart of why you are in business, who you are as a company and what your impact is on the world. It is now mission critical for the industry to both tell its own ESG story and continue to ensure that its deep commitment to mitigating its environmental impact is actioned".