Addressing the non-CO2 effects of aviation
In the second quarter of 2024, we were invited by PGGM and Columbia Threadneedle to sign a letter on the non-CO2 effects of aviation, addressed to all airline companies engaged through Climate Action 100+ and the Net Zero Engagement Initiative. The main climate change contributions from non-CO2 emissions of aviation come from the formation of persistent contrails and particularly the resulting aviation-induced clouds, as well as from the chemical atmospheric reactions driven by emissions of nitrogen oxides.
RUFFER’S VIEW FROM THE COCKPIT
As a result of fundamental and ESG analysis across a handful of companies within the aviation space, and research reports from the industry, we have concluded that decarbonising this emissions-intensive sector will need coordinated action from airlines, aircraft and engine manufacturers, fuel providers, regulators, governments and policymakers. Throughout our portfolio, we have exposure to players across the entire value chain and have tried to elevate our engagement to address the wider issue of decarbonising the industry, rather than just individual companies.
ENGAGING WITH OTHER ACTORS
We have engaged with several companies whose stock we hold within aviation and related industries about the challenge decarbonisation presents. These include Ryanair, Jet2 and BP. As we wrote in last quarter’s Responsible Investment Report, engaging with companies across the value chain can enable us to use insights from different players to improve our knowledge, corroborate or challenge what any individual participant is communicating and contribute to system stewardship. We have also engaged with policymakers by signing a letter sent to the EU Commission, pushing for the removal of aeronautics as a specific ‘green’ activity under the EU Taxonomy.
ANOTHER STRING TO OUR SYSTEM STEWARDSHIP BOW
We recognise that airlines have devoted the lion’s share of their efforts so far to carbon emissions, given the linkage to fuel efficiency (a cost saving) and the endeavours of the industry bodies. As a result, non-CO2 emissions have often been overlooked, despite their potentially significant contribution to airlines’ carbon footprint. This letter serves to bring these emissions into scope for future target setting. We are aware that the airline lobby group has recently pushed back against EU efforts to monitor non-CO2 effects, but we think it is an important aspect of aviation’s footprint and should be tackled by airlines sooner rather than later. After the letter is sent, we intend to engage directly with the airlines we hold to discuss how they are addressing non-CO2 emissions in their operations.