Breaking Travel News

Capital A Earns Top Sustainability Ratings in Aviation Industry

Capital A Earns Top Sustainability Ratings in Aviation Industry

Capital A has been ranked among top performers in global sustainability ratings following an effective revamp of its sustainability approach to prioritise group wide measures to address climate risks and improve stakeholder communication.

The latest award received by the group is AirAsia’s GOLD Environmental Sustainability rating from the Centre for Aviation in its 2023 CAPA-Envest Global Airline Sustainability Benchmarking Report. AirAsia is one of 19 airlines to receive the rating on the back of a strong recovery of its efficiency and environmental performance as the airline group continues to rebuild its network post pandemic. AirAsia delivered the 11th lowest CO2 emissions per passenger and 12th lowest emission per seat in a survey of almost 80 airlines globally.

Concurrently, the London Stock Exchange Group ranked Capital A 15th out of 124 airlines using its ESG scoring that measures a company’s relative ESG performance, commitment and effectiveness across 10 main themes. AirAsia’s score of 71% is not only highest among Asean-based carriers, it also lands the airline among top performing global low-cost carriers.

These recognitions add to a number of positive outcomes in ESG assessments by the company’s listed boards, published towards the end of 2023 based on 2022 sustainability disclosures. In Malaysia, Capital A’s ESG score rose to 3.2 from 2.9 out of 5 between 2020 and 2022, surpassing the 2.9 threshold of the FTSE4Good Bursa Malaysia Index in all years of assessment. Capital A’s Thai associate Asia Aviation also saw its ratings soar to 81% from 67% between the 2021 and 2022 assessment cycles, ranking it among AA rated companies of the Stock Exchange of Thailand’s ESG Ratings.

Internationally, Capital A benchmarks against two global indices for publicly listed companies with market capitalisation of US$1 billion and above*. Capital A earned a score of 40% in the latest S&P Global Corporate Sustainability Assessment (CSA), up from 32% in 2020. S&P CSA scores are used for selection into the Dow Jones Sustainability Indices (DJSI) which aims to highlight eligible companies that demonstrate ESG leadership.

ADVERTISEMENT

Last year, Capital A also submitted its 2021 social performance disclosures for assessment under the Bloomberg Gender Equality Index* (GEI), scoring above the inclusion threshold as well. Boosting Capital A’s performance is its track record in increasing female participation in jobs across the board. Among 2022 highlights are: women make up 53.8% of all employees and 32% of all senior managers. AirAsia also maintained its lead as the airline employing the highest number of women pilots in Southeast Asia at 6.6%, above the global average of 5.8%.

“In 2020, we began reorienting Capital A’s sustainability focus for a better balance between our external and internal sustainability practice. While we were very active in external social activities prior to 2020, the global pandemic necessitated a recalibration. This coincided with a period when climate change regulations on aviation were also beginning to take shape,” said Capital A Chief Sustainability Officer, Yap Mun Ching.

“There are two main prongs to our strategy. The first was to apply our cross-cutting cost and efficiency discipline to managing our ESG risks. One area where we can see the results of this approach is in the strengthening of our environmental strategy. In 2021, we published our first net zero roadmap to identify key pathways to decarbonisation. Every year since, we have added depth to our understanding and with the aid of data modelling, we have been able to better integrate ESG considerations into our overarching business strategy,” she added.

Yap said the second was to communicate more effectively. “Aviation sustainability is a complex topic which is not easily accessible to our stakeholders. We expended a lot of resources to build better understanding among policy-makers, regulators, investors, business partners and very importantly, our staff – Allstars. We revamped the way we report on our sustainability achievements to highlight data-based results and deliverables. Internally, we also enhanced governance by establishing Board sustainability committees, including appointing sustainability advisors to our Aviation Board Sustainability Committee, given the importance of this issue to our core airline business.”

This measure has been received well by the company’s stakeholders. In December 2023, Maybank IB Research published a report maintaining a BUY call for Capital A shares, citing its “commendable” long term ESG targets and “refreshing” report.

In the latest report cycle for 2023 performance, Capital A and Asia Aviation (sole shareholder of Thai AirAsia) will both be publishing standalone sustainability reports to give more emphasis to sustainability and complement the entities’ drive to further strengthen communication of their ESG priorities and strategies.

(*Between 2020 and 2023, Capital A remained eligible for ESG benchmarking assessments by these two global indices but not for inclusion due to a pandemic-induced drop in market capitalisation during the reporting periods. Capital A expects further improvement in its market capitalisation as AirAsia returns to full fleet operations in 2024.)