a benchmarking tool for online sustainability …company rankings airline sector this report is an...

A i r F r a n c e - K L M , A i r T r a n , A l a s k a A i r Group,Inc. , American Airlines, British Airways, Cont inenta l Ai r l ines , ExpressJet Holdings, Japan Airlines, JetBlue Airways Corporation, Lufthansa G r o u p , N o r t h w e s t Airlines, Skywest Inc, Southwest Airlines, UAL, U S A i r w a y s G r o u pJ. Emil Morhardt, Elgeritte Adidjaja, Juliet Marie Archer, Jeffrey Alan Astor, Owen Black Brewer, Olivea Omalara Fayola Callender-Scott, Carolyn Hendricks Collins, Jacyln T. D'Arcy, Bukola Jimoh, Teija Campbell Mortvedt, Brittany Nunnink, Caitrin Elise O'Brien, Noah Monte Proser, Emma Ryland Reese, and Aden Eyob F. Weldegiworgis

2010Sustainability Reporting of the

World's Largest Airline CompaniesPacific Sustainability Index Scores

A benchmarking tool for online sustainability reporting

Helping CommerceHelp Nature

Claremont McKenna College Roberts Environmental Center

www.roberts.cmc.edu 2010 Sustainability Reporting of World's Largest Airline Companies

Contents Topics Page Company Rankings 3 Lead Analyst’s Comment 4 PSI Overview 5 PSI Scoring in a Nutshell 6 Environmental Intent Topics 7 Environmental Reporting Topics 8 Social Intent Topics 9 Social Reporting Topics 10 Environmental Intent Element of the PSI Scores

11

Environmental Reporting Element of the PSI Scores

12

Social Intent Element of the PSI Scores 13 Social Reporting Element of the PSI Scores 14 Environmental Intent Scores Ranking 15 Environmental Reporting Scores Ranking 16 Environmental Performance Scores Ranking 17 Social Intent Scores Ranking 18 Social Reporting Scores Ranking 19 Social Performance Scores Ranking 20 Visual Cluster Analysis 21 Company Rankings Based on the Number of Goals Reported

22

Company Rankings Based on the Better Performance Reported

23

Analyst’s Comments, alphabetically listed by company name

24

Questions should be addressed to: Dr. J. Emil Morhardt, Director ([email protected]) Roberts Environmental Center Claremont McKenna College 925 N. Mills Ave. Claremont, CA 91711-5916, USA Direct line: (909) 621-8190 Elgeritte Adidjaja, Research Fellow: (909) 621-8698 ([email protected]) Departmental secretaries: (909) 621-8298

The Roberts Environmental Center has been the foremost analyst of corporate sustainability reporting for over a decade. We analyze corporate online disclosure using our Pacific Sustainability Index (PSI) and publish the results on this website.

Industrial Sector** 2004

2005

2006

2007

2008

2009

2010

Aerospace and defense X X Airlines X X Banks, Insurance X Chemicals X X X Largest Companies in China X Colleges/Universities X1 Computer, Office Equipment, and Services

X

Consumer Food, Food Production, & Beverages

X X

Electronics and Semiconductors

X X X

Energy X* X* X Entertainment X Food Services X Forest and Paper Products X X X General Merchandiser X Homebuilders X Industrial and Farm Equipment

X X

Mail, Freight, & Shipping X Medical Products & Equipment

X

Metals X* X Mining, Crude Oil X* X Motor Vehicle and Parts X X X Oil and Gas Equipment X Petroleum and Refining X X Pharmaceuticals X X X X Scientific, Photo, & Control Equipment

X

Telecommunications, Network, & Peripherals

X

Utilities, Gas, and Electric X* X* X * Multiple-sector category was separated in later years. **As of March 2010. 1 Top 50 Liberal Art Colleges.

The goal of corporate report analysis conducted by the Roberts Environmental Center is to acquaint students with environmental and social issues facing the world’s industries, and the ways in which industry approaches and resolves these issues. The data presented in this report were collected by student research assistants and a research fellow at the Roberts Environmental Center. Copyright 2010 © by J. Emil Morhardt. All rights reserved.

2

Corporate Environmental and Sustainability Reporting

Overall Grade

Roberts Environmental CenterClaremont McKenna College

Company Rankings

Airline Sector

This report is an analysis of the voluntary environmental and social reporting of companies on the 2008 Fortune Global 500 and Fortune 500 Airline sector lists. Data were collected from corporate websites during the initial analysis period (dates shown below). A draft sector report was then made available online and letters were sent to all companies inviting them to review the analysis, to identify anything missed by our analysts, and to post additional material on their websites if they wished to improve their scores. We omitted Northwest Airlines because it is in the process of merging with Delta Airlines.

3.55

17.03

17.67

21.22

21.40

23.04

25.87

28.69

31.42

34.33

35.52

36.43

37.61

48.27

56.83

0 25 50 75 100

Skywest Inc

US Airways Group

ExpressJet Holdings

Delta Airlines

JetBlue AirwaysCorporation

AirT ran

Alaska Air Group,Inc.

British Airways

Air France - KLM

UAL

Southwest Airlines

American Airlines

Continental Airlines

Lufthansa Group

Japan AirlinesJapan Airlines (Japan)A+Lufthansa Group (Germany)A-Continental Airlines (USA)BAmerican Airlines (USA)BSouthwest Airlines (USA)BUAL (USA)B-Air France - KLM (France)B-British Airways (U.K.)C+Alaska Air Group,Inc. (USA)CAirTran (USA)CJetBlue Airways Corporation (USA)

C

Delta Airlines (USA)C-ExpressJet Holdings (USA)C-US Airways Group (USA)C-Skywest Inc (USA)D-

2/25/2009 4/22/200910/16/2009 2/1/2010

throughthrough

Analysis Period:Draft sector report available for review:


3

Claremont McKenna College Roberts Environmental Center


Lead Analyst’s Comments

The sector was led by Japan Airlines (JAL Group) with detailed CSR and extensive social and environmental initiatives. JAL Group ranked highest in the sector in enviromental reporting and performance and social intent and performance scores. Clearly, environmental responsibility is not new to JAL Group. The company has invested in exploring “ways of flying in an eco-friendly fashion” since 1990, when it created its fuel efficiency committee. Researching the environment to minimize the company’s impact on it is a key part of JAL Group’s sustainability initiative. Furthermore, JAL Group has programs in everything from volunteer tree planting, to Siberian wildfire reporting, to preventing desertification in inner-Mongolia. JAL Group has discovered thoughtful, intelligent ways to reduce its fuel consumption

and is a model of environmental reporting for industry as a whole. Lufthansa, which ranked 2nd in the sector, also provides an impressive corporate responsibility report. Lufthansa puts particular emphasis on the preservation of biodiversity and ecosystems, supports the International Air Transport Association’s Fuel Efficiency Goal, and is attempting to reduce the CO2 emissions of its fleet by 25% by 2020. To achieve the same end, Continental Airlines offers a carbon offset program to their customers, has invested $12 billion in new fuel efficient aircraft, and begun testing biofuels blends. American Airlines and AirTran both discuss fuel conservation and emissions reduction but, neither company explicitly mentions climate change. ExpressJet Holdings also does not mention climate change, but has nonetheless made considerable improvement in its sustainability reporting since last year. Alaska Air Group discusses climate change very briefly, but expresses interest in adopting environmentally responsible initiatives. Although it scored lower, JetBlue’s Fuel Challenge Team seeks ways to conserve fuel and reduce overall consumption. The company, which received a C-, reports savings from new initiatives in both dollars and GHG emissions. As airplanes emit considerable amounts of greenhouse gases, greenhouse gas emissions, fuel consumption, and climate change are critical sustainability topics for airlines. The International Air Transport Association, which represents 230 airlines (93% of air traffic), focuses almost entirely on emissions in its environmental reports and web pages, and boasts tremendous strides in fuel efficiency in the past decade, but admits further emission reductions are necessary and possible (www.iata.org). The majority of the sector’s companies discussed greenhouse gas emissions to some extent in their sustainability reporting, and top ranked companies received excellent environmental intent scores as a result. Overall, over 60% of the companies in the sector addressed climate change. Unfortunately, many of our airline-specific topics were ignored by these companies. Fewer than 10% of the airlines we analyzed addressed air quality on board, and only about one-fifth discussed food waste. Large companies with higher annual revenues performed better on average and covered more sector-specific topics. Although the majority of the companies scored were based in the United States, the two highest scores were received by a Japanese and German airline. The nine lowest scoring companies are American, and all airlines based outside the United States were ranked in the top half of the sector.

Bukola Jimoh, CMC ‘11 Roberts Environmental Center Research Analyst

Claremont, California February 11, 2010

4


the PSI Scoring SystemThe Pacific Sustainability Index (PSI) uses two systematic questionnaires to analyze the quality of the sustainability reporting—a base questionnaire for reports across sectors and a sector-specific questionnaire for companies within the same sector. The selection of questions is based on, and periodically adjusted to, the most frequently-mentioned topics in over 1,900 corporate sustainability reports analyzed from 2002 through 2009 at the Roberts Environmental Center.

The Roberts Environmental CenterThe Roberts Environmental Center is an environmental research institute at Claremont McKenna College (CMC). Its mission is to provide students of all the Claremont colleges with a comprehensive and realistic understanding of today’s environmental issues and the ways in which they are being and can be resolved--beyond the confines of traditional academic disciplines and curriculum--and to identify, publicize, and encourage policies and practices that achieve economic and social goals in the most environmentally benign and protective manner. The Center is partially funded by an endowment from George R. Roberts (Founding Partner of Kohlberg Kravis Roberts Co. and CMC alumnus), other grants, and gifts, and is staffed by faculty and students from the Claremont Colleges.

The Pacific Sustainability Index (PSI) Overview

Methodology Student analysts download relevant English language web pages from the main corporate web site for analysis. Our scoring excludes data independently stored outside the main corporate web site or available only in hard copy. When a corporate subsidiary has its own sustainability reporting, partial credit is given to the parent company when a direct link is provided in the main corporate web site. We archive these web pages as PDF files for future reference. Our analysts use a keyword search function to search reporting of specific topics and, they fill out a PSI scoring sheet (http://www.roberts.cmc.edu/PSI/scoringsheet.asp), and track the coverage and depths of different sustainability issues mentioned in all online materials.

scores and ranksWhen they are finished scoring, the analysts enter their scoring results into the PSI database. The PSI database calculates scores and publishes them on the Center’s web site. This sector report provides an in-depth analysis on sustainability reporting of the largest companies of the sector, as listed in the latest Fortune Global 500 and 1000 lists. Prior to publishing our sector report, we notify companies analyzed and encourage them to provide feedback and additional new online materials, which often improve their scores.

What do the scores mean? We normalize all the scores to the potential maximum score. Scores of subsets of the overall score are also normalized to their potential maxima. The letter grades (A+, A, A-, B+, etc.), however, are normalized to the highest scoring company analyzed in the report. Grades of individual companies in the report might be different from grades posted online on the Roberts Environmental Center's web site, since the normalization of scores of an individual company online is not limited to the companies analyzed in the sector report, but also includes other companies of the same sector irrespective of the year of analysis. Companies with scores in the highest 4% get A+ and any in the bottom 4% get F. We assign these by dividing the maximum PSI score obtained in the sector into 12 equal parts then rounding fractional score up or down. This means that A+ and F are under-represented compared the other grades. The same technique applies to the separate categories of environmental and social scores. Thus, we grade on the curve. We assume that the highest score obtained in the sector and any scores near it represent the state of the art for that sector and deserve an A+.

www.roberts.cmc.edu 2010 Sustainability Reporting of World's Largest Airline Companies5


1. intent

The “Intent” topics are each worth 2 points; 1 point for a discussion of intentions, vision, or plans, and a 1 point for evidence of specific actions taken to implement them.

2. reporting

The “Reporting” topics are each worth 5 points and are either quantitative (for which we expect numerical data) or qualitative (for which we don’t).

For quantitative topics, 1 point is available for a discussion, 1 point for putting the information into perspective (i.e. awards, industry standards, competitor performance, etc., or if the raw data are normalized by dividing by revenue, number of employees, number of widgets produced, etc.), 1 point for the presence of an explicit numerical goal, 1 point for numerical data from a single year, and 1 point for similar data from a previous year.

For qualitative topics, there are 3 criteria summed to 5 points: 1.67 points for discussion, 1.67 points for initiatives or actions, and 1.67 points for perspective.

3. Performance

For each “Reporting” topic, 2 performance points are available.

For quantitative topics, 1 point is given for improvement from the previous reporting period, and 1 point for better performance that the sector average (based on the data used for this sector report normalized by revenue).

For qualitative topics we give 1 point for any indication of improvement from previous reporting periods, and 1 point for perspective.

PSI Scoring in a Nutshell

Distribution of Scores by topics

Our analysis of sustainability reporting has a set of basic topics applied to all organizations as well as a series of sector-specific topics. The topics are divided into environmental and social categories—the latter including human rights—and into three types of information: 1) intent, 2) reporting, and 3) performance.

The 11 “human rights” topics are scored differently, with 5 “reporting” points; 2.5 points for formally adopting a policy or standard, and 2.5 points for a description of monitoring measures. In addition, there are 2 “performance” points; 1 point for evidence of actions to reinforce policy and 1 point for a quantitative indication of compliance.

Environmental, Qualitative

Data24%

Environmental, Quantitative

Data24%Social, Human

Rights Data15%

Social, Qualitative

Data29%

Social, Quantitative

Data8%



Percent of total possible score for all companies combined.

Environmental Intent Topics

Airline

Acco

unta

bilit

y

Man

agem

ent

Polic

y

Visi

on

0

10

20

30

40

50

60

70

Accountability*

Report contact person4Environmental structure or management19

Management*

Environmental education16Environmental management system20Environmental accounting21Stakeholder consultation23

Policy*

Environmental policy statement9Climate change/global warming10Habitat/ecosystem conservation11Biodiversity12Green Purchasing13

Vision*

Environmental visionary statement5Environmental impediments and challenges6


Notes: * These numbers correspond to the numbers in the PSI questionnaire. Items with numbers higher than 99 are sector specific questions.

7



Environmental Reporting Topics

Airline

Emis

sion

s to

air

Ener

gy

Man

agem

ent

Recy

clin

g

Was

te

Wat

er

0

5

10

15

20

25

30

Emissions to air*Carbon dioxide (CO2) or equivalents (i.e. GHG)112Nitrous oxide (N2O)117Carbon monoxide (CO)118Air quality on board airplane231Pandemic prevention232Fleet profile233

Energy*Energy used/consumption26Renewable energy consumption27

Management*Environmental notices of violation38Environmental expenses and/or investments39Environmental fines40Innovation in air transporation230

Recycling*Waste recycled30Office recycling rate32

Waste*Waste disposed of34Hazardous waste produced35Hazardous waste released37Packaging materials waste109Food Waste228Service Items Waste229

Water*Water used29



8



Social Intent Topics

Airline

Acco

unta

bilit

y

Man

agem

ent

Polic

y

Soci

al D

emog

raph

ic

Visi

on

0

10

20

30

40

50

60

70

Accountability*Health and Safety, or Social organizational structure51

Third party validation54

Management*Workforce profile: Ethnicities/Race17

Workforce profile: Gender18

Workforce profile: Age52

Emergency preparedness program53

Employee training for career development82

Policy*Social policy statement 45

Code of conduct or business ethics47

Supplier screening based on social or environmental performance/ Supplier management.

49

Social Demographic*Employment for individuals with disabilities80

Vision*Social visionary statement 42

Social impediments and challenges43



9



Social Reporting Topics

Airline

Hum

an R

ight

s

Man

agem

ent

Qual

itativ

e So

cial

Quan

titat

ive

Soci

al

0

10

20

30

40

50

60

70

Human Rights*Sexual harassment1Political Contributions7Bribery8Anti-Corruption practices58Corporal punishment of employees59Equal opportunity, elimination of discrimination, promotion of diversity, or non-discrimination policy

60

Free association and collective bargaining of employees

61

Fair compensation of employees62Forced labor of employees63Working hours64Use of illegal child labor65

Management*Women in Management2

Qualitative Social*Community Development66Employee Satisfaction Survey67Community Education68Occupational health and safety protection70Employee volunteerism72Noise226Local air quality227

Quantitative Social*Turnover Rate3Recordable incident rate/ Accident indices74Lost workday case rate75Health and safety citations76Health and safety fines77Social community investment81



10


Environmental Intent Element of the PSI Scores

= Percentage of companies addressing the topics= Percentage of the total possible number of points awarded to all companies combined for each topic, indicating the depth of reporting coverage measured by PSI criteria for each topic.

Airline

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Biodiversity

Report contact person

Environmental accounting

Habitat/ecosystemconservation

Stakeholder consultation

Environmental managementsystem

Green Purchasing

Climate change/globalwarming

Environmental impedimentsand challenges

Environmental education

Environmental structure ormanagement

Environmental policystatement

Environmental visionarystatement


11


Environmental Reporting Element of the PSI Scores


Airline

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Environmental fines

Environmental notices of violation

Air quality on board airplane

Pandemic prevention

Food Waste

Hazardous waste released

Carbon monoxide (CO)

Service Items Waste

Environmental expenses and/or investments

Packaging materials waste

Hazardous waste produced

Office recycling rate

Nitrous oxide (N2O)

Innovation in air transporation

Waste disposed of

Water used

Renewable energy consumption

Waste recycled

Carbon dioxide (CO2) or equivalents (i.e. GHG)

Fleet profile

Energy used/consumption


12


Social Intent Element of the PSI Scores


Airline

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Workforce profile: Age

Third party validation

Social impediments and challenges

Emergency preparedness program

Workforce profile: Gender

Workforce profile: Ethnicities/Race

Supplier screening based on social or environmentalperformance/ Supplier management.

Health and Safety, or Social organizational structure

Employment for individuals with disabilities

Social policy statement

Employee training for career development

Social visionary statement

Code of conduct or business ethics


13


Social Reporting Element of the PSI Scores


Airline

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Health and safety fines

Health and safety citations

Turnover Rate

Lost workday case rate

Corporal punishment of employees

Use of illegal child labor

Forced labor of employees

Employee Satisfaction Survey

Recordable incident rate/ Accident indices

Working hours

Local air quality

Fair compensation of employees

Free association and collective bargaining of employees

Women in Management

Social community investment

Bribery

Political Contributions

Anti-Corruption practices

Sexual harassment

Noise

Employee volunteerism

Community Education

Occupational health and safety protection

Equal opportunity, elimination of discrimination, promotion ofdiversity, or non-discrimination policy

Community Development


14


Environmental Intent Scores

Environmental intent scores include topics about the firm’s products, environmental organization, vision and commitment, stakeholders, environmental policy and certifications, environmental aspects and impacts, choice of environmental performance indicators and those used by the industry, environmental initiatives and mitigations, and environmental goals and targets.

EI Scores Rankings

Lufthansa GroupA+Japan AirlinesAUALB+Southwest AirlinesB+Continental AirlinesB+Air France - KLM BJetBlue Airways CorporationBDelta AirlinesB-American AirlinesB-British AirwaysC+US Airways GroupC-Alaska Air Group,Inc.C-ExpressJet HoldingsC-AirTranD+Skywest IncF

0 25 50 75 100

Skywest Inc

AirT ran

ExpressJet Holdings


US Airways Group

British Airways

American Airlines

Delta Airlines


Air France - KLM

UAL


Southwest Airlines

Japan Airlines

Lufthansa Group


15


Environmental Reporting Scores

Environmental reporting scores are based on the degree to which the company discusses its emissions, energy sources and consumption, environmental incidents and violations, materials use, mitigations and remediation, waste produced, and water used. They also include use of life cycle analysis, environmental performance and stewardship of products, and environmental performance of suppliers and contractors.

ER Scores Rankings

Japan AirlinesA+American AirlinesBLufthansa GroupBSouthwest AirlinesBBritish AirwaysCContinental AirlinesCAir France - KLM CUALC-ExpressJet HoldingsC-AirTranC-JetBlue Airways CorporationD+US Airways GroupDDelta AirlinesDAlaska Air Group,Inc.D-Skywest IncD-

0 25 50 75 100

Skywest Inc


Delta Airlines

US Airways Group


AirT ran

ExpressJet Holdings

UAL

Air France - KLM


British Airways

Southwest Airlines

Lufthansa Group

American Airlines

Japan Airlines


16


Environmental Performance Scores

Environmental performance scores are based on whether or not the firm has improved its performance on each of the topics discussed under the heading of environmental reporting, and on whether the quality of the performance is better than that of the firm’s peers. Scoring for each topic is one point if performance is better than in previous reports, two points if better than industry peers, three points if both.

EP Scores Rankings

American AirlinesA+Japan AirlinesBAir France - KLM CSouthwest AirlinesC-Lufthansa GroupD+British AirwaysD+AirTranD+JetBlue Airways CorporationD-ExpressJet HoldingsD-Continental AirlinesD-US Airways GroupFUALFSkywest IncFDelta AirlinesFAlaska Air Group,Inc.F

0 25 50 75 100

UAL

Delta Airlines

US Airways Group


Skywest Inc



ExpressJet Holdings

British Airways

AirT ran

Lufthansa Group

Southwest Airlines

Air France - KLM

Japan Airlines

American Airlines


17


Social Intent Scores

Social intent scores include topics about the firm’s financials, employees, safety reporting, social management organization, social vision and commitment, stakeholders, social policy and certifications, social aspects and impacts, choice of social performance indicators and those used by the industry, social initiatives and mitigations, and social goals and targets.

SI Scores Rankings

Lufthansa GroupA+Southwest AirlinesBContinental AirlinesB+Air France - KLM BUALB+JetBlue Airways CorporationC+British AirwaysC+Alaska Air Group,Inc.B-American AirlinesB-US Airways GroupC-ExpressJet HoldingsC-Delta AirlinesCAirTranCSkywest IncD-

0 25 50 75 100

Skywest Inc

Delta Airlines

AirT ran

US Airways Group

ExpressJet Holdings

American Airlines


British Airways


UAL

Air France - KLM


Southwest Airlines

Lufthansa Group

Japan Airlines


18


Social Reporting Scores

Social reporting scores are based on the degree to which the company discusses various aspects of its dealings with its employees and contractors. They also include social costs and investments.

SR Rankings

Japan AirlinesA+Lufthansa GroupA+Continental AirlinesA-UALB+Alaska Air Group,Inc.B+American AirlinesBSouthwest AirlinesB-British AirwaysB-Air France - KLM B-AirTranB-Delta AirlinesC+US Airways GroupCJetBlue Airways CorporationCExpressJet HoldingsC-Skywest IncD-

0 25 50 75 100

Skywest Inc

ExpressJet Holdings


US Airways Group

Delta Airlines

AirT ran

Air France - KLM

British Airways

Southwest Airlines

American Airlines


UAL


Lufthansa Group

Japan Airlines


19


Social Performance Scores

Social performance scores are based on improvement, performance better than the sector average, or statements of compliance with established social standards.

SP Rankings

Japan AirlinesA+Lufthansa GroupB+Continental AirlinesB-Alaska Air Group,Inc.B-UALC+American AirlinesC+Southwest AirlinesCDelta AirlinesCAirTranCBritish AirwaysC-Air France - KLM C-ExpressJet HoldingsD+US Airways GroupDJetBlue Airways CorporationDSkywest IncD-

0 25 50 75 100

Skywest Inc

US Airways Group


ExpressJet Holdings

British Airways

Air France - KLM

Delta Airlines

AirT ran

Southwest Airlines

American Airlines

UAL



Lufthansa Group

Japan Airlines


20


Visual cluster analysis multivariate data of the sort produced by the PSI are difficult to summarize. Here we have created radar diagrams of the performance of each company analysed in the sector by its environmental and social intent, reporting, and performance sorted by company ranking. Maximum scores will match the outer sides of the hexagon which total up to 100 percent.

Visual Cluster Analysis

EI = Environmental Intent, ER = Environmental Reporting, EP = Environmental PerformanceSI = Social Intent, SR = Social Reporting, SP = Social Performance

Japan Airlines

0

2 5

5 0

7 5

1 0 0E R

E P

S P

S R

S I

E I

Lufthansa Group

0

2 5

5 0

7 5

1 0 0E R

E P

S P

S R

S I

E I


0

2 5

5 0

7 5

1 0 0E R

E P

S P

S R

S I

E I

American Airlines

0

2 5

5 0

7 5

1 0 0E R

E P

S P

S R

S I

E I

Southwest Airlines

0

2 5

5 0

7 5

1 0 0E R

E P

S P

S R

S I

E I

UAL

0

2 5

5 0

7 5

1 0 0E R

E P

S P

S R

S I

E I

Air France - KLM

0

2 5

5 0

7 5

1 0 0E R

E P

S P

S R

S I

E I

British Airways

0

2 5

5 0

7 5

1 0 0E R

E P

S P

S R

S I

E I


0

2 5

5 0

7 5

1 0 0E R

E P

S P

S R

S I

E I

AirTran

0

2 5

5 0

7 5

1 0 0E R

E P

S P

S R

S I

E I

JetBlue Airways Corporation

0

2 5

5 0

7 5

1 0 0E R

E P

S P

S R

S I

E I

Delta Airlines

0

2 5

5 0

7 5

1 0 0E R

E P

S P

S R

S I

E I

ExpressJet Holdings

0

2 5

5 0

7 5

1 0 0E R

E P

S P

S R

S I

E I

US Airways Group

0

2 5

5 0

7 5

1 0 0E R

E P

S P

S R

S I

E I

Skywest Inc

0

2 5

5 0

7 5

1 0 0E R

E P

S P

S R

S I

E I

www.roberts.cmc.edu 2010 Sustainability Reporting of World's Largest Airline Companies 21


Number of Explicit numerical goals Reported

Explicit Goals Most Frequently Reported

2

7

14

2

0 5 10 15 20 25


British Airways

Lufthansa Group

Japan Airlines

Carbon dioxide (CO2) or equivalents (i.e. GHG)

1 4

Packaging materials waste2 3Waste disposed of3 3Food Waste4 2Carbon monoxide (CO)5 2Nitrous oxide (N2O)6 2Waste recycled7 2


22


Number of Topics Showing Performance Improvement over Previous Year Data

Topics Most Frequently Reported as Having Improvements over previous year data

1

1

2

3

11

0 5 10 15 20

Lufthansa Group

American Airlines

Air France - KLM

AirTran

Japan Airlines

Noise1 3Fleet profile2 2Innovation in air transporation3 2Occupational health and safety protection

4 2

Pandemic prevention5 1Local air quality6 1Carbon dioxide (CO2) or equivalents (i.e. GHG)

7 1

Recordable incident rate/ Accident indices

8 1

Employee volunteerism9 1Community Education10 1Employee Satisfaction Survey11 1Community Development12 1Women in Management13 1


23


Air France - KLM

0 2 5 5 0 7 5

SSA

SESA

E

Air France-KLM’s 2007-2008 Corporate Responsibility Report communicates the company’s awareness of environmental issues, such as global warming, the preservation of biodiversity, and the conservation of ecosystems. On board its aircraft, it is making small but significant changes towards becoming more sustainable. It has converted the majority of the paper-based log books and documentation forms used in the cockpit to electronic log books. It is also using lighter pallets to reduce aircraft weight, and therefore decrease fuel usage. The company is incorporating more biodegradable packaging materials, and offering fair-trade coffee and chocolate. Including discussion of other environmental and social topics, explicit numerical goals, and reporting of any improvement between the current and previous year performance would have improved Air France-KLM’s overall PSI scores.

S60%

E4 0 %

Air France - KLM 2007/2008 Corporate Social Responsibility Report

Comparison with sector averages Source of points

B-

Olivea Omalara Fayola Callender-Scott

Distribution of points

E=Total Environmental Score, ESA=Environmental Sector Average Score, EI=Environmental Intent, ER=Environmental Reporting, EP=Environmental Performance, S=Total Social Score, SSA=Social Sector Average Score, SI=Social Intent, SR=Social Reporting, SP=Social Performance

EI ER EP SI SR SP

Air France - KLM

65

20 10

6537

20

Environmental Intent

Question Category Max Score General CommentScore %Accountability 4 Needs improvement1 25

Management 8 Excellent6 75

Policy 10 Good7 70

Vision 4 Excellent3 75

Environmental Reporting

Question Category Max Score General CommentScore %Emissions to air 42 Needs substantial improvement7 17

Energy 14 Needs improvement4 29

Management 28 Needs substantial improvement3 11

Recycling 14 Needs substantial improvement1 7

Waste 42 Needs substantial improvement6 14

Water 7 Needs improvement3 43

Social Intent

Question Category Max Score General CommentScore %Accountability 4 Good2 50

Management 10 Good7 70

Policy 6 Good3 50

Social Demographic 2 Excellent2 100


Social Reporting

Question Category Max Score General CommentScore %Human Rights 77 Needs improvement28 36

Management 7 Needs improvement2 29

Qualitative Social 49 Needs improvement22 45

Quantitative Social 42 Needs substantial improvement3 7



AirTran

0 2 5 5 0 7 5

SSA

SESA

E

AirTran has done an excellent job of providing information on its work with the community through different volunteer organizations such as “Habitat for Humanity” and the “Make a Wish Foundation.” The report shows exceptional generosity in corporate giving to various community organizations including the A+ awards program in support of youth education. On the other hand, AirTran does not offer much information on its environmental commitment. When environmental topics are mentioned, they are vague or brief. It would be beneficial if the company would include discussions of its environmental actions, policies, and goals. There seems to be no branch or contact person specifically related to environmental wellbeing. AirTran does provide some information on its airplane emission levels but it is lumped together as one large “emissions” statement, which ought to be broken down into its various components (CO, CO2, NOX.) AirTran describes its commitment to customers’ health and safety, but it does not go into much detail about the health and safety of its employees. It would also be helpful if the company discussed some of the facts and figures of its workforce such as race, gender, and age distributions.

S70%

E3 0 %

AirTran 2007/2008 CSR Report and 2009 Web Pages


C

Teija Campbell Mortvedt



EI ER EP SI SR SP

AirTran

19 155

19

36

22


Question Category Max Score General CommentScore %Accountability 4 Needs substantial improvement0 0


Policy 10 Needs substantial improvement0 0

Vision 4 Needs improvement1 25


Question Category Max Score General CommentScore %Emissions to air 42 Needs improvement11 26

Energy 14 Needs substantial improvement2 14




Water 7 Needs substantial improvement0 0

Social Intent



Policy 6 Good4 67

Social Demographic 2 Needs substantial improvement0 0


Social Reporting








0 2 5 5 0 7 5

SSA

SESA

E

Alaska Air Group has good 2009 social sustainability reporting, demonstrating an awareness of the social impact the company has on the communities it flies to, and has made a commitment to support these communities by contributing to and investing in programs that promote education, community development, environmental projects, and employee volunteerism. For instance, Alaska Air Group raised $ 600,000 for the Make-A-Wish Foundation as well as donating over $100,000 to educational programs recommended by its employees. In addition, Alaska Air Group has shown dedication to supporting and enhancing the experience of its employees as evidenced in programs such as The Employee Assistant Fund (EAF). However, its evident commitment to environmental sustainability is very weak. Although the website has a virtual assistance, I found myself spending several hours searching outside the Alaska Air Group site for any information on the company’s stance on environmental policies. Finally, after finding a link to the environmental manual, to my dismay it was on a login-in basis. A little more openness is certainly called for, and would improve the PSI score as well as the company’s image, at least in my eyes.

S84%

E16 %

Alaska Air Group, Inc 2009 Annual Report and 2009 Web Pages


C

Aden Eyob F. Weldegiworgis



EI ER EP SI SR SP

Alaska AirGroup,Inc.

31

5 0

42 4332




Policy 10 Needs improvement4 40

Vision 4 Good2 50








Social Intent



Policy 6 Good4 67

Social Demographic 2 Good1 50

Vision 4 Good2 50

Social Reporting

Question Category Max Score General CommentScore %Human Rights 77 Good56 73


Qualitative Social 49 Needs substantial improvement12 24




American Airlines

0 2 5 5 0 7 5

SSA

SESA

E

American Airlines’ has some sustainability reporting on its web site, but no formal sustainability report. Reporting on energy, water, recycling, and overall waste includes numerical data and is well documented but should include details of hazardous waste releases and should report on environmental management activities such as fines and investments, food sources and recycling, service items, packaging, and materials waste. The company has implemented programs to track hazardous waste resulting in a significant reduction in water use and hazardous waste produced within the past six years. Surprisingly, there is no discussion of climate change, nor any mention of conservation, biodiversity, or environmental accounting. The qualitative social reporting is detailed in some areas, but needs more reporting on specific activities and initiatives. No quantitative data about social activities are reported, nor is there any discussion about the various aspects of human rights most good reporters include.

S54%

E4 6 %

American Airlines 2009 Web Pages


B

Carolyn Hendricks Collins



EI ER EP SI SR SP

American Airlines

58

3121

38 4130










Recycling 14 Needs improvement6 43


Water 7 Good4 57

Social Intent



Policy 6 Good4 67



Social Reporting



Qualitative Social 49 Good25 51




British Airways

0 2 5 5 0 7 5

SSA

SESA

E

British Airways’ 2007-2008 Sustainability Report needs more breadth and depth. It demonstrates awareness of the company’s environmental impacts and documents practices to minimize the contributions to climate change, air quality, noise, waste, and renewable resources, and promises to protect ecosystems and biodiversity as indicated by its compliance with the Wildlife Trust’s New Biodiversity Benchmark for Land Management, and Global Canopy Program. But the report lacks quantitative information on environmental expenditures, hazardous waste releases, disposal of packing materials, food, and service items, and any substantial information on human rights, management, health and safety programs.

S62%

E3 8 %

British Airways 2007/2008 CSR Report and 2009 Web Pages


C+

Aden Eyob F. Weldegiworgis



EI ER EP SI SR SP

British Airways

50

215

4637

20




Policy 10 Good6 60









Social Intent



Policy 6 Good4 67



Social Reporting








0 2 5 5 0 7 5

SSA

SESA

E

Continental Airlines demonstrates its commitment to protecting and preserving the environment through its initiatives to reduce emissions and fuel consumption using innovative technology and equipment. In 2009, Continental released a publication, "Commitment to Environmental and Social Responsibility", which details the steps that it has already taken, as well as those that it will take in the near future. Continental outlines its corporate initiative, Eco-Skies, intended to reduce the company’s own carbon footprint, while encouraging its customers and suppliers to do the same. The airline’s statements on reducing its carbon footprint lack quantitative data regarding its actual emissions, the company’s improvements, and the results of certain programs, such as its water conservation and waste recycling programs. Continental engages in efforts of social sustainability as well. Within the community, Continental invests in local projects as well as sponsorships of organizations that promote and foster health and medicine, culture, education, and sports. The airline’s cargo division has contributed to humanitarian efforts by transporting provisions, volunteers, and relief assistance to disaster-torn areas, including communities that have endured hurricanes, wildfires, and earthquakes. Internally, Continental promotes effective communication and cooperation among its employees. The Commitment to Social Responsibility does not provide any quantitative data on recordable incident rate, lost workday case rate, health and safety citations, or turnover rate, however.

S68%

E3 2 %

Continental Airlines 2009 Environmental Report, Global Citizenship Report and Web Pages


B

Emma Ryland Reese



EI ER EP SI SR SP


69

202

6951

32




Policy 10 Excellent8 80









Social Intent

Question Category Max Score General CommentScore %Accountability 4 Excellent4 100


Policy 6 Good4 67


Vision 4 Good2 50

Social Reporting







Delta Airlines

0 2 5 5 0 7 5

SSA

SESA

E

Delta Airline's provides almost no sustainability reporting this year, despite performing adequately in previous years. The company should expand on the little information they currently have available.

S69%

E3 1%

Delta Air Lines 2007 Corporte Responsibility Report and 2009 Web Pages


C-

Bukola Jimoh



EI ER EP SI SR SP

Delta Airlines

58

7 0

1932

22




Policy 10 Good7 70









Social Intent



Policy 6 Good3 50


Vision 4 Good2 50

Social Reporting







ExpressJet Holdings

0 2 5 5 0 7 5

SSA

SESA

E

ExpressJet Holdings shows a marked concern for the environment in its Environmental Policy Statement and on its website. Its use of a newer, more fuel-efficient fleet of planes and its onboard recycling program are commendable. Unfortunately, only a few other initiatives are documented. ExpressJet could greatly improve its score by providing quantitative information about its recycling program, CO2 emissions, energy used, fuel consumption, and water use, and efforts to limit emissions. ExpressJet should also clearly state its stance on global warming. Furthermore, the report needs to include more information on fair employment practices, and efforts to provide for the upward mobility of its employees and a point of contact information specifically for sustainability matters.

S57%

E4 3 %

Express Jet 2009 Web Pages, Principles of Conduct, and Environmental Policy Statement


C-

Noah Monte Proser



EI ER EP SI SR SP

ExpressJet Holdings

27

17

2

2320 16













Social Intent



Policy 6 Good4 67


Vision 4 Needs substantial improvement0 0

Social Reporting







Japan Airlines

0 2 5 5 0 7 5

SSA

SESA

E

Japan Airlines Corporation does a great job outlining its plans and goals to reduce its carbon footprint and impact on the environment. In a statement to the public, its CEO stated that with the news that the airline industry is responsible for 2% of the world's CO2 emissions, Japan Airlines would put forth its best possible effort to reduce its own emissions. With a goal of 20% emission reduction by 2010, Japan Airlines has decreased by 17% by the fiscal year 2007. It has also made a significant effort to reduce the amount of packaging and food waste as well as the noise generated in surrounding areas. The environmental report is thorough and stresses key topics of environmental sustainability. It is also clear that it has produced a solid effort to benefit neighboring communities.

S59%

E4 1%

Japan Airlines 2007 CSR and 2009 Web Pages


A+

Jeffrey Alan Astor



EI ER EP SI SR SP

Japan Airlines

85

48

14

100

60 58







Question Category Max Score General CommentScore %Emissions to air 42 Good23 55






Social Intent






Social Reporting



Qualitative Social 49 Excellent42 86




JetBlue Airways Corporation

0 2 5 5 0 7 5

SSA

SESA

E

JetBlue Airways may be new to the world of sustainability reporting, but since its first flight in 2000, the company has been well aware of what it means to be an environmentally and socially responsible company. The US Department of Transportation has reported that JetBlue is the most fuel-efficient airline in America. As a younger and smaller company, JetBlue was able to start with more current values, ethics and better processes than most airlines. It makes a strong and apparent effort to interact well with its employees and it customers as it focuses on being transparent, and it is very willing to engage in dialogue with its customers. In 2006, JetBlue began gathering data to create its first Environmental and Social Performance Report. Although the report lacks much quantitative data, the efficiency of JetBlue's new fleet and its partnerships with other responsible companies, show it is on the right path. In the future we should be seeing much more detailed CSR reports from JetBlue, as well as follow ups on some of its current innovative research to incorporate things such as a nontoxic de-icing system, more efficient engines, and its new terminal at JFK, which focuses on recycling spilled jet fuel, using paperless tickets, re-using cooking oils, and more.

S60%

E4 0 %

JetBlue 2006 Environmental and Social Report and 2009 Web Pages


C

Brittany Nunnink



EI ER EP SI SR SP


62

11 2

54

2412




Policy 10 Good6 60

Vision 4 Good2 50








Social Intent



Policy 6 Good4 67



Social Reporting







Lufthansa Group

0 2 5 5 0 7 5

SSA

SESA

E

Lufthansa's 115-page corporate social responsibility report is well-crafted and detailed. The company's dedication to the environment is evident through its complete reporting of almost all environmental data, and through clear initiatives and programs. The majority of the information about the company’s social and corporate governance policies is found in the United Nations Global Compact, of which Lufthansa is a signatory. The only information noticeably missing from Lufthansa’s report are data regarding reported incidents, environmental health and safety violations/fines, and lost workday case rates. Lufthansa’s report does not follow GRI guidelines and has not been validated by a third party, but it is still very complete and contains the vast majority of the information included in the PSI.

S64%

E3 6 %

Lufthansa Sustainability Report 2008


A-

Caitrin Elise O'Brien



EI ER EP SI SR SP

Lufthansa Group

92

315

8559

44













Social Intent



Policy 6 Good4 67



Social Reporting

Question Category Max Score General CommentScore %Human Rights 77 Excellent63 82


Qualitative Social 49 Good28 57




Skywest Inc

0 2 5 5 0 7 5

SSA

SESA

E

SkyWest Airlines expresses no commitment to bettering its environment or community. It briefly describes its safety policies and employee diversity, but the information is cursory and shows no initiative. The company seems to be uninterested in community development and its web pages have no information on sustainability, climate change, or any other environmental issues. SkyWest Inc. should start developing programs that promote corporate responsibility and sustainable growth if it hopes to score better in the future.

S71%

E2 9 %

SkyWest Inc. 2009 Web Pages


D-

Bukola Jimoh



EI ER EP SI SR SP

Skywest Inc0

3

0

45

4













Social Intent






Social Reporting

Question Category Max Score General CommentScore %Human Rights 77 Needs substantial improvement7 9






Southwest Airlines

0 2 5 5 0 7 5

SSA

SESA

E

Southwest Airlines states that it is committed to delivering the best for its employees, customers, and the environment, and does discuss a few important environmental issues such as energy, but provides almost nothing on the company’s own environmental performance. It does, however, have many commendable social activities that benefit its communities and employees. There seems to be a determination to pursue more aggressive sustainability initiatives, but there is not much reporting yet.

S56%

E4 4 %

Southwest Airlines: 2008 Cares Report and 2010 Web Pages


B

Jacyln T. D'Arcy



EI ER EP SI SR SP

Southwest Airlines

69

307

69

37 26





Vision 4 Good2 50








Social Intent




Social Demographic 2 Good1 50


Social Reporting







UAL

0 2 5 5 0 7 5

SSA

SESA

E

UAL summarizes its sustainability activities in its 2008-2009 Corporate Responsibility Report. Quantitative social and environmental data are condensed in one page, making it very easy to analyze. There are, however, no historical data, quantitative numerical goals, or reporting of performance improvement, likely due to the first attempt to gather all data into one report. The narration provided in the report is comprehensive, touching the bases of many fundamental sustainability aspects in airline industry. But most of the reporting is positive, leaving out much discussion about the clear challenges faced by the industry and options of new innovation to overcome them. However, this report is still quite a good start.

S68%

E3 2 %

UAL 2008-2009 Corporate Responsibility Report and 2010 Web Pages


B-

Owen Black Brewer



EI ER EP SI SR SP

UAL

69

170

6247

30




Policy 10 Good7 70









Social Intent





Vision 4 Good2 50

Social Reporting







US Airways Group

0 2 5 5 0 7 5

SSA

SESA

E

The US Airways 2008 Environmental Report takes a very superficial and basic approach to environmental reporting. Almost no data are provided and the report is mostly composed of vague statements about the company's environmental initiatives and goals. The company provides the most substantial information for its LEED-certified buildings, the benefits of which are outlined in detail, and compose the bulk of the sustainability report. There is no mention of climate change or global warming, which should be a matter of great importance, particularly for a company in an industry that relies heavily on fossil fuel. It is clear that this environmental report is a hastily thrown-together compilation designed to appease stakeholders and that US Airway's environmental initiatives are not fully developed, or at least not in a form the company wishes to make public.

S67%

E3 3 %

US Airways 2008 Environmental Report


C-

Caitrin Elise O'Brien



EI ER EP SI SR SP

US Airways Group

35

90

23 25

12





Vision 4 Good2 50








Social Intent






Social Reporting






A i r F r a n c e - K L M , A i r T r a n , A l a s k a A i r Group,Inc. , American Airlines, British Airways, Cont inenta l Ai r l ines , ExpressJet Holdings, Japan Airlines, JetBlue Airways Corporation, Lufthansa G r o u p , N o r t h w e s t Airlines, Skywest Inc, Southwest Airlines, UAL, U S A i r w a y s G r o u p

Contact Information

Roberts Environmental CenterThe Roberts Environmental Center is a research institute at Claremont McKenna College, endowed by George R. Roberts, Founding Partner, Kohlberg Kravis Roberts & Co. The Center is managed by faculty and staff, and its research, including the material in this report, is done by students at the Claremont Colleges.

Dr. J. Emil Morhardt, Director, Phone: 909-621-8190, email: [email protected] Adidjaja, Research Fellow, Phone: 909-621-8698, email: [email protected] Environmental Center, Claremont McKenna College, 925 N. Mills Avenue, Claremont, CA 91711-5916, USA.

Claremont McKenna College, a member of the Claremont Colleges, is a highly selective, independent, coeducational, residential, undergraduate liberal arts college with a curricular emphasis on economics, government, and public affairs.

Claremont McKenna College

The Claremont CollegesThe Claremont Colleges form a consortium of five undergraduate liberal arts colleges and two graduate institutions based on the Oxford/Cambridge model. The consortium offers students diverse opportunities and resources typically found only at much larger universities. The consortium members include Claremont McKenna College, Harvey Mudd College, Pitzer College, Pomona College, Scripps College, Keck Graduate Institute of Applied Life Sciences, and the Clremont Graduate University which—includes the Peter F. Drucker and Masatoshi Ito Graduate School of Management.

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