By Stephane Lagut, EY Global Aerospace & Defense Sector Leader
While every industry is facing more pressure from a wide spectrum of stakeholders to incorporate more sustainability and ESG actions into their day-to-day operations, the commercial aerospace sector in particular has been under the microscope over the past several years as travel volumes rise and the carbon impact of air travel becomes more widely understood. As a major source of carbon emissions, the commercial aerospace sector can make an enormous impact through operational improvements, sustainable aviation fuel (SAF), new propulsion technologies (such as electric and hydrogen) and global market-based measures like carbon offsets.
Like the range of flight paths jets take all over the globe every day, the journey to sustainability is not a singular route. It should build on the long-term path toward achieving net-zero emissions for the entire aerospace industry. This will require use of several eco-friendly tools, technologies and processes that go beyond just advancements in fuel and propulsion technology.
The Sustainability Footprint Starts on the Ground
The sustainability discussion in commercial aviation is too often focused on fuel efficiency. The sustainability footprint of an airplane starts long before the time of flight, and needs to be seen holistically through the complete value chain that includes ground operations, recycling, energy consumption on the ground, usage of water, and more.
Sustainability begins when the aircraft is being built. The quality, weight and durability of the materials used to build, and aircraft have a direct impact on sustainability. Once the plane is in the hangar and on the tarmac, there is an opportunity to make processes greener’ before the plane takes off. For example, there is room to develop recycling programs, proper water usage regulations and energy consumption measurements on ground operations.
While it may seem counterintuitive, it is best to not just focus on fuel efficiency, when talking about sustainability in commercial aviation. Widening the lens to beyond fuel efficiency will allow us to step back and see the bigger picture.
The Evolving Role of Supply Chains
Recently, the commercial aviation sector has been buoyed by renewed hopes that the worst of the pandemic is behind us. Yet amid this recovery, original equipment manufacturers (OEMs) and suppliers are grappling with demand volatility, supply chain ruptures and production constraints like never before. For decades, supply chain has been the heart of the commercial aviation industry, bringing in value, innovation, and vulnerability. Now, due to various geo-political factors and business remodeling, the role of supply chains has evolved as it relates to sustainability.
Where are the opportunities for new innovation, value-driven sustainability initiatives and other avenues for generating profits and increasing shareholder value?
Workforce: Motivate, Attract and Maintain
When talking about ESG, the ‘S’ in the equation cannot be ignored. For the commercial aviation industry to further their sustainability motto and develop actionable ESG actions to make a positive impact, they need to manage their relationship with the workforce.
The pandemic has scrambled the availability of labor and created new priorities among workers, resulting in a drift away from traditional roles. Businesses in the aviation sector willing to change how they approach workforce development have an opportunity to stand apart from the competition. Businesses must revisit their personnel strategy to attract new talent whose career mindsets differ from previous generations.
The ability to attract, develop, engage, retain and inspire both the current workforce and the next generation of employees is a must. In addition, these same leaders must change their own ways, embracing new behaviors and value systems and getting comfortable with shifting corporate structures and collaborative cultures.
Some ways the airline industry can reimagine their workforce strategy, furthering their ESG initiatives is by defining your purpose and promote it among your workforces, recognizing that the workforce expectations are changing, having a more diverse and inclusive workforce, redefining the role of HR, and more.
Additionally, to the extent possible, businesses can look at investing in automation. In the aviation sector, this is an opportune time to look at how to automate different jobs that have not previously been automated. This is a first step towards long-term sustainability, and a company’s digital, value engineering and data analytics functions all have a role to play. Digital innovation for airlines is bound to improve productivity, satisfaction, and customer experience and can also be used to achieve ESG goals. The entire A&D ecosystem will undergo multiple waves of disruption, similar to what we’re seeing transpire in the automotive industry — impacting current operations, R&D, supply chains, workforce plans and M&A strategies.
Reshaping the long-term future of commercial aviation
The future of commercial aviation can be sustainable, but aerospace leaders need to keep every option on the table, and not simply focus on table stakes. An airplane has many parts outside the fuel tank: the fuselage, the engines, the wings, and the entire crew at the airline that helps it operate, not to mention numerous vendors and suppliers up and down the supply chain. ESG programs in commercial aviation must have a holistic focus before they can truly be cleared for takeoff.
About the author:
Stephane Lagut is EY’s Global Advanced Manufacturing & Mobility Assurance Leader; Global Aerospace & Defense Sector Leader. He is an audit partner with 30 years of experience serving large multinational companies in various industries in the Americas, Europe and Asia. He is passionate about helping develop enterprise resilience with a particular focus in advanced manufacturing and mobility, with deep sector knowledge in automotive and aerospace and defense.