Chapter 1: Research Intention - EUR



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Previous literature strongly recommends an evaluation and comparison of CSR initiatives in the environmental dimension among airlines (Gebel 2004, Hooper & Greenall 2005, Lynes & Dredge 2006). The study reported herein uses content analysis to establish observations on Corporate Social Responsibility (CSR) information provided by the lead-edge airlines. A cross-continental analysis will be performed to identify differences among continents. Using data from sustainability reports, the environmental commitment of airlines from all over the world is examined and examples reports are given. Specific environmentally related CSR initiatives implemented in the airline industry are identified and their level of adoption is examined. This study is designed to allow for an evaluation and comparison of the state of environmentally related CSR and the reporting thereof among different airlines and continents. The empirical analysis suggests that the airline companies recognize the increasing importance of sustainability in their communication with the stakeholders. Great differences were found in the reporting of the companies’ commitment to sustainability. Possible reasons for this include the voluntary nature of reporting, variation in legislation, the differences in required information by stakeholders and the degree of performance of sustainability. A factors found relevant in determining the quality of reporting is the use of the framework proposed by the Global Reporting Initiative. Keywords: Corporate social responsibility, environmental disclosure, aviation, Global Reporting Initiative, third-party assurance, CSR disclosure requirements, integrated reporting. Table of Contents TOC \o "1-3" \h \z \u Chapter 1: Research Intention PAGEREF _Toc340094540 \h 51.1 Introduction PAGEREF _Toc340094541 \h 51.2 Aviation and the Environment PAGEREF _Toc340094542 \h 61.3 Outline of the thesis PAGEREF _Toc340094543 \h 81.4 Aim of the thesis PAGEREF _Toc340094544 \h 9Chapter 2: Theoretical Elaboration PAGEREF _Toc340094545 \h 102.1 Defining Corporate Social Responsibility PAGEREF _Toc340094546 \h 102.1.1 Economic sustainability PAGEREF _Toc340094547 \h 102.1.2 Social responsibility PAGEREF _Toc340094548 \h 112.1.3 Environmental protection PAGEREF _Toc340094549 \h 112.2 Motivations for CSR PAGEREF _Toc340094550 \h 112.3 Communicating CSR PAGEREF _Toc340094551 \h 152.3.1 Media for reporting CSR PAGEREF _Toc340094552 \h 152.3.2 A sustainability reporting framework PAGEREF _Toc340094553 \h 172.3.3 Global CSR Disclosure Requirements PAGEREF _Toc340094554 \h 202.3.4 External Verification PAGEREF _Toc340094555 \h 232.4 CSR reporting and the airline industry PAGEREF _Toc340094556 \h 242.5 Environmental initiatives in the airline industry PAGEREF _Toc340094557 \h 26Chapter 3: Research Methodology PAGEREF _Toc340094558 \h 303.1 Hypotheses PAGEREF _Toc340094559 \h 303.2 Sample PAGEREF _Toc340094560 \h 323.3 Methodology PAGEREF _Toc340094561 \h 33Chapter 4: Results PAGEREF _Toc340094562 \h 364.1 Reflection on sample PAGEREF _Toc340094563 \h 364.2 Descriptive statistics PAGEREF _Toc340094564 \h 39Chapter 5: Conclusion PAGEREF _Toc340094565 \h 475.1 Conclusions PAGEREF _Toc340094566 \h 475.2 Limitations PAGEREF _Toc340094567 \h 495.3 Suggestions for further research PAGEREF _Toc340094568 \h 50References PAGEREF _Toc340094569 \h 51Appendix 1: Sample PAGEREF _Toc340094570 \h 57Appendix 2: The Scorecard PAGEREF _Toc340094571 \h 59Appendix 3: Scores per airline PAGEREF _Toc340094572 \h 63Chapter 1: Research Intention1.1 Introduction During the last two decades, concerns about the sustainability and social responsibility of businesses have become a high profile issue in many countries and industries (Campbell 2007). Increased pressure from consumers and investors, sharpened legislation, environmental education and the uptake of eco-labels have led to growing demand for transparency about corporate behavior on a range of issues (Kolk 2008). Especially intergovernmental bodies, Non-Government Organizations (NGO’s) and the general public encourage firms to behave socially responsible (Moreno and Capriotti 2009). This caused the paradigm to shift away from valuing profit maximization as the most important objective of business, towards incorporating Corporate Social Responsibility (CSR) practices into all operations. As a result, CSR has become a subject of much interest within the academic world (KPMG 2005). Companies generally present information on their sustainability effort and performance via their website, news releases or CSR disclosures (Campbell and Sayer 2004). CSR disclosure (sometimes also labeled ‘triple bottom line accounting’ or ‘People, Planet, Profit’) can be defined as the information a company discloses about its environmental impact and the relationship with its stakeholders, by means of relevant communication channels. The growing CSR awareness is reflected in the increasing number of CSR disclosures (Kolk 2005). Lyon and Maxwell (2006, 2007) find that firms with poor reputations disclose extensively, while firms with excellent reputation disclose nothing, as they gain little by disclosing successes since they are already expected to succeed. Accordingly, the focus of much of the empirical research on environmental motivations lies with the ‘heavy’ industries sectors such as the chemical, and transport sectors. Pressures from different stakeholder groups are reflected in CSR disclosure: firms in consumer sectors may be closely monitored by consumer groups. Hence, they will report more on social issues. Firms in polluting industries tend to have relatively high levels of environmental disclosure, following that they are often being monitored by environmental groups. Accordingly, polluting firms proactively disclose much information on their environmental performance to reduce the possible political costs arising from their despised activities (Deegan and Gordon 1996, Meek et al. 1995). 1.2 Aviation and the EnvironmentThe focus within this thesis lies upon the airline industry. The continuous growth of the aviation industry, the global importance of the industry’s operations and its environmental impact makes it a good sector to study in terms of environmental disclosure. Plus, the airline industry holds an interesting juxtaposition: although the industry is part of the service sector, it possesses various characteristics that are similar to the aforementioned ‘heavy’ industries: intense regulation, high capital costs and a tendency towards oligopolies. The public has criticized community noise exposure and the degraded air quality around airports since the industry’s beginnings. More recently, however, attention shifted toward limiting the effect of aviation on the global climate (Dallara 2011). The industry is greatly contributing to the greenhouse effect and is considered one of the causes of global warming. In particular, the atmospheric carbon dioxide levels are ever-increasing. Carbon dioxide is one of several greenhouse gasses (GHGs), and causes harm to the environment. A small but growing portion of global climate change is attributed to the aviation industry. Aviation induces climate change results not only by emitting carbon dioxide, but also from emissions of nitrogen oxides and water vapor. From calculations by the European Commission, it appears that the airline industry is currently the fastest growing polluter in terms of greenhouse gasses. Trends of global emissions of greenhouse gases from air traffic show a substantial autonomous growth.Recognizing the sector’s contribution to environmental impact, and given the projected growth, it is not surprising that aviation industries are at the forefront of the debate concerning sustainability. Interest in the scope and effectiveness of airlines’ effort to control and lessen the negative environmental and social impact of their business is growing globally (Kolk, 2008). Subsequently, the airline industry is increasingly being encouraged to contribute to sustainable development and document performance through the disclosure of social and environmental information. The aviation alliances OneWorld, Skyteam and Star Alliance all drafted a Corporate Social Responsibility Statement, setting out the commitments of all alliance-members. Despite the increasing pressure, the airline industry was relatively slow at adopting sustainability reporting. Research by Cowper-Smith and Grosbois (2011) showed that only 14 out of 41 researched airlines produced corporate sustainability reports as of January 2009. However, a more recent analysis by PricewaterhouseCoopers (2011) found that 30 out of a sample of 46 airlines produced sustainability reports as of August 2011. In this sample, 61 out of 73 reported on environmental issues as of September 2012. Airlines are clearly taking notice and working to improve their corporate sustainability reporting. The overall airline industry has ambitious goals to reduce emissions. The International Air Transport Association (IATA) documented the plans in a report: ‘A global approach to reducing aviation emissions – First stop: carbon neutral growth from 2020.’ Efforts include commitments to put a maximum level on aviation CO2 emissions by the year 2020 through improving fuel efficiency with an average of 1.5% annually, starting as of 2009. Recently, the EU has extended the European Union Emissions Trading Scheme (EU ETS) to the airline industry. The EU ETS, launched in 2005, is aimed at combating climate change and was the first large emissions trading scheme in the world. After the energy industry, air transport is now the largest sector included in the EU-ETS. As of January 1st 2012, airlines receive tradable allowances covering a certain level of CO2 emissions from their flights per year. The EU charges airlines flying in and out of Europe for their carbon dioxide emissions. Any airline that does not comply faces a fine, and the EU has the right to ban persistent offender airlines from its airports. Although the carbon-tax scheme came into force January 2012, fees do not have to be paid until March 2013. Nonetheless, these rules have drawn protest from airlines around the world. At the end of 2011, the council of the International Civil Aviation Organization (ICAO) demanded, without result, that the EU respect the principles applied in civil aviation and refrain from applying EU law outside of its territory and to non-European airlines respectively. Another attempt to overturn the scheme, by the US, was also rejected by the European Court of Justice stating that “the extension of the EU ETS to aviation does not infringe the principle of territoriality of third countries.” Intense resistance against the European solo effort has developed in the meantime. Led by the US and China, 26 nations are now protesting the EU's airline carbon tax. The Chinese aviation authority has banned its countries’ airlines from paying the new European Union carbon charge. The Civil Aviation Administration of China (CAAC) stated that airlines were not allowed to pay the EU charge, increase freight costs or add other fees. In large part due to growing public concern about CSR and global warming, corporate sustainability principles are becoming increasingly important. There is a need for airlines to disclose information on their environmental performance. This thesis tests to see if the increased importance of sustainability principles results in a higher quantity and higher quality of reporting of sustainability performance. It is expect that the quantity is reflected by the increasing amount of airlines actively reporting on their environmental actions and results. The quality is represented by an increase in the solidity and comparability of environmental disclosures. Despite being a ‘hot topic’, there is currently little research on CSR practices and the reporting thereof in the airline industry, and the current state of CSR in the industry is therefore largely unknown. The literature strongly recommends an evaluation and comparison of CSR initiatives in the environmental dimension among airlines (Gebel 2004, Hooper & Greenall 2005, Lynes & Dredge 2006). The pivotal role of airlines in the environmental debate provides justification for evaluating the quality of their environmental reports. 1.3 Outline of the thesisThis chapter elaborates on the concept of sustainability. The first part introduced CSR and the second part focused on the environmental impact of aviation and the role CSR plays. Moreover, the disposition and aim of the paper are discussed explicitly in this part.As the discussion on CSR requires theoretical elaboration on the rationale of it, chapter 2 is dedicated to previous literature. Literature on CSR, environmental disclosures and the environmental impact of aviation is discussed. Also elaborated on are the format of reports, the use of GRI guidelines, the possible influence of (local) regulation and alliance-membership. To conclude, auditor involvement in assessing the reliability of sustainability reporting is addressed.The third chapter describes the chosen objects of analysis and the methodology. An analysis of 73 airline companies is presented to show the nature and content of environmental disclosure in general, and to compare and contrast companies’ progress in reporting on the sustainability of their operations. Moreover, there is a review on the different media that was used by the airline companies to communicate information on CSR. The results in chapter 4 will present an indication of the current world-wide situation – the status quo – with regard to aviation and CSR disclosure. The evidence gathered from airlines’ sustainability reports will used to elaborate on the transparency efforts. Moreover, potential influences on quality by GRI, auditor involvement, legislation and alliance-membership are discussed.The final section of this research paper draws conclusions about the current state of sustainability reporting in the airline industry, and will reflect upon possibilities and limitations within this field of research. 1.4 Aim of the thesisThis paper is aimed at answering the following research question: what is the overall quality of environmentally-related disclosures in the airline industry, and how do different continents compare? The objective of the research is to qualitatively evaluate the level of environmental CSR disclosure within the airline industry across the continents. This is done by assessing the environmental reporting quality – defined as the extent to which the reports of the sampled airlines reflect the principles of the GRI standards and the environmental initiatives proposed by IATA to reduce air transport's carbon footprint. Within this study, a framework is created in order to allow for measurement and comparison. Another objective is to consider the impact, if any, of the use of GRI, third-party verification, legislation and alliance-membership on the quality of environmental reports.The airline sector has one of the largest groups of stakeholders of any sector, and airlines need to be responsive to all of them (PwC 2011). Finding answers to the question will help all stakeholders – including communities, governments and standard setters – gain an insight into how airlines are committed to our environment, and how solid reporting helps companies to efficiently manage the world’s resources. Chapter 2: Theoretical Elaboration A discussion on Corporate Social Responsibility (CSR) requires an extensive theoretical elaboration. This chapter covers the theory to provide the airline industry with a basis to engage in environmentally responsible actions and provides an overview of techniques made available to the industry to fulfill this responsibility. 2.1 Defining Corporate Social Responsibility Many scholars have proposed definitions for CSR (Rahman 2011). Yet, there is no universal definition for CSR, making the development of theory difficult. Approaches include “the obligation toward society assumed by business” (Bateman and Snell 2004). Or “a manager’s duty or obligation to make decisions that nurture, protect, enhance and promote the welfare and well-being of stakeholders and society as a whole” (Jones et al 2000). The stakeholder model has become central to the CSR paradigm (Jones, 1995). Corporate social responsibility focuses on corporate governance as a vehicle for incorporating social and environmental responsibilities into the business decision-making process, benefiting not only financial investors, but also employees, consumers, and communities (Gill, 2008). Generally, corporate action on CSR concerns activities that go beyond legal obligations and beyond the objective of profitability. We classify three types of sustainability, being social responsibility, environmental protection or economic sustainability. 2.1.1 Economic sustainabilityReaders of sustainability reports often desire to know how the company contributes to the sustainability of the economic systems in which they operate. An organization may be financially viable, but this may have been achieved by creating significant externalities that impact other stakeholders. Economic Performance Indicators are intended to measure the economic outcomes of an organization’s activities and the effect of these outcomes on a broad range of stakeholders.2.1.2 Social responsibility Social responsibility represents recognizing the needs of everyone, not just the shareholders. In this category, social impacts associated with the various stakeholder-groups are addressed. It involves all the company’s interaction and communication with stakeholders, including customers, the employees, the local community and the society at large on issues like human rights, employee welfare and product responsibility. 2.1.3 Environmental protectionThis thesis is focused on the environmental pillar, which is aimed at achieving a higher environmental performance. It concerns the effective protection of the environment and an efficient use of natural resources. Environmental indicators reflect inputs (materials, energy, water), outputs (waste, effluents, emissions) and the mode of impact an organization has on its environment. Organizational energy use can be split into direct and indirect energy. Direct energy is energy that was consumed by the company’s operations, indirect energy is the energy used by those who serve the company. Measuring energy use is relevant because the burning of fossil fuels, to generate energy, causes the emission of greenhouse gasses. Emission indicators measure standard releases of polluting gasses into the atmosphere. 2.2 Motivations for CSRThere are numerous theories to explain the incorporation of CSR into the management equation. Reasons for environmental reporting were rarely explicitly explained in the reports studied. In this paragraph, theories most relevant for understanding the incentive to manage and report on environmental performance are discussed. R. Edward Freeman (1984) was the first to introduce stakeholder theory, identifying stakeholders of a firm and describing the importance of giving due regard to the interests of this group. Freeman defined a stakeholder as “any group or individual who can affect or is affected by the achievement of the organization’s objectives”. In his book, titled Strategic Management: A Stakeholder Approach, he states that a ‘stakeholder approach emphasizes active management of the business environment, relationships and the promotion of shared interests to ensure the long-term success of the firm’. A modern organization has been entrusted with an extensive amount of economic and human resources, and therefore has the power to affect many more people than the participants in the firm’s operations or transactions. Firms are to incorporate the needs and values of all stakeholders within their strategic and day-to-day decision-making process. CSR has also been defined “a complex web of interaction between an organization and its stakeholders” (Sj?berg, 2003, p192). Groups and individuals that are considered stakeholders by Friedman (2006) include employees, NGO’s, local communities and future generations. The relationship between a company and its stakeholders entails information asymmetry. Pressure arises for firms to communicate information relevant to the different stakeholders. The way organizations interact and communicate with their stakeholders is a key feature in the concept of CSR and environmental reporting. Stakeholder theory therefore provides an accepted explanation to the voluntary corporate disclosures phenomenon. In short, the stakeholder theory identifies the dynamic and complex relationship between firms and their environment; providing a justification for incorporating strategic decision making into the field of corporate social responsibility (Adenibi 2005). Donaldson (1990) proposes stewardship theory and asserts that there is a moral imperative for managers to be a good steward of the corporate assets and essentially ‘do the right thing’. This theory describes an implicit corporate social contract between business and society, whereby organizations agree to be a good steward of the society’s resources . Many of the organizations studied for this paper emphasized in their CSR-reports how involved they were with our planet and how they wish to contribute to conserving it. Air France-KLM states in the 2011 sustainability report: “we consider our responsibility to contribute to efforts to reduce CO2 emissions (p31).” Or as Aeroflot’s report writes: “We acknowledge our responsibility to society and future generations for preservation of the natural environment (p34).” Siegel and Javidan (2005) found that aspects of leadership are positively related to the engagement of CSR by firms. Strategic leadership theory indicates that firms use the concept of sustainability strategically. Corporations monitor the sustainability of their business not only because it is the right thing to do, but also because they believe that it is in their best (financial) interest to do so. As Lantos (2001) states, strategic CSR is exhibited when a firm undertakes certain ?caring corporate community service activities that accomplish strategic business goals (p3).” Many economists have investigated the relationship between CSR and profitability. Gamerschlag et al (2010) discovered that higher profitability is associated with more environmental disclosures. For one, this may be caused by a positive external effect of CSR on the organization’s reputation. According to the reputation perspective, perceptions of firms’ concern for the wider society may influence judgments of the public, with social responsiveness signaling that firms have a achieved relationships with potentially powerful groups in their environments. Thus, an organization’s communication with external parties about its CSR policy and performance may generate goodwill with employees, consumers and investors (Fombrun and Shanley 1990). Many airlines promote their environmental awareness in order to attract more customers. Since caring for the environment is becoming more important to passengers too, making them aware of corporate sustainability can help win their loyalty and give ‘greener’ airlines a competitive edge (PwC 2011). According to a research conducted by the Carbon Disclosure Project (2010), corporate travel sustainability management is taking off. Nearly four in ten Global 500 companies publicly reported carbon emissions from employee travel in 2010, a figure growing at about 10% annually. Air travel is the leading category for travel sustainability management: flights account for the lion’s share of companies’ travel carbon footprints and travel expenses. An increasing number of firms is measuring, reporting and managing their emissions from business travel. Firms selecting flights based on lower environmental impact, and not just on price and convenience, creates opportunities for airline operators. Aircraft operators that can succeed in meeting fuel economy demands of the coming decade stand to gain enormous competitive advantages (Brighter Planet 2011). Air Berlin is one of the airlines in this sample to recognize the opportunities that lie ahead, as their 2011 annual report reads: “The environmentally-aware and sustainability-conscious customer segment is growing strongly. Meeting the needs of these discerning customers, particularly families and business travelers, brings with it high growth potential because preserving the environment is a value added to which our customers attach great importance (p68).”The resource-based view theory, proposed by Barney (1991) and closely linked to strategic leadership theory, explains that when companies engage in CSR strategically, they can yield a sustainable competitive advantage. In this light, effectively dealing with increasing scarcity or price of natural resources can result in efficiency gains. Purchasing ‘environmentally-friendly’ aircraft engines is a good example, as these engines are more fuel-efficient and thus allow airlines to maintain lower costs. Since the biggest single expense for any airline is fuel cost, with the least opportunity to mitigate movement in price, it is beneficial to reduce fuel consumption wherever possible. Airlines are therefore heavily incentivized to minimize its use. Russo and Fouts (1997) tested the resource-based view theory empirically and discovered that companies with a higher level of environmental performance perform financially better. That conclusion, ‘it pays to be green’, is consistent with a resource-based perspective.Slack resources theory also proposes a positive relation between corporate social performance (CSP) – often used as a synonym for CSR - and corporate financial performance (CFP). However, it follows a temporal reasoning that different from the resource-based view theory. It proposes that CFP comes first, and is followed by CSP. Good financial performance (i.e. high CFP) creates slack resources that are necessary to engage in corporate social responsibility (i.e. higher CSP) (Waddock and Graves 1997). Political cost theory proposes that managers are concerned with political considerations, including preventing explicit or implicit taxes, or other regulatory actions (Healy and Palepu 2001). An overview of regulations currently in place will be presented later in this chapter. In addition to politicians, NGO’s and other stakeholder groups increasingly force companies to act in favor of their specific interests. By disclosing information on their environmental performance, companies attempt to minimize the (potential) political or societal costs. In conclusion, various theories are in use to explain the incorporation of CSR into the management equation. Throughout this paper, light will be shed on sustainability issues utilizing the different theoretical lenses proposed by previous research. From the theory, so far, one could conclude that companies would profit from recognizing green issues not as compliance but as new growth engine.2.3 Communicating CSR Any initiative undertaken by corporations to gain legitimacy and the confidence of the public through responsible corporate behavior must be accompanied by a capacity to communicate with – and respond to the demands of – stakeholders (Moreno and Capriotti 2009). Companies can realize numerous benefits by measuring and reporting corporate social performance. Accurate measurement and solid reporting enables organizations to better evaluate their risks and opportunities, identify cost savings, and manage resource use. 2.3.1 Media for reporting CSRSustainability disclosure enables companies and organizations to communicate sustainability information in a way that is similar to financial reporting (Gamerschlag et al 2010). Credible reporting is foundational in sustainability engagement and relates more closely to sound and globally accepted accounting practices than most people realize. Taking a look at the Corporate Value Chain (Scope 3) Accounting and Reporting Standard of the Greenhouse Gas Protocol reads that the “GHG accounting and reporting of emission inventory shall be based on the following principles: relevance, completeness, consistency, transparency, and accuracy”. These principles are directly related to the principles of financial accounting. Moreover, the reporting guidelines provided by the Global Reporting Initiative (GRI) were developed hand in hand with investor groups that were looking for consistency of data similar to that of financial reporting.CSR disclosure covers the economic, environmental and corporate social performance of the organization. It explains the company’s policy on sustainability issues, describes the problems it encounters and presents CSR performance. Systematic sustainability reporting gives comparable data, with agreed disclosures and metrics. This thesis is concentrated on disclosures in the environmental dimension. Environmental disclosure covers topics such as resource use and environmental performance. In conclusion, CSR disclosure relates to the voluntary and mandatory provision of information on issues that are important to a wide range of a company’s stakeholders. For stakeholder communication to be successful, environmental information must reach the right audience. There are different media available to communicate information on CSR. One way for companies to report on CSR is to dedicate a section to CSR in the annual report (15% in this sample). It is more common, however, that companies provide stand-alone CSR or sustainability reports to communicate their corporate social performance, in addition to the annual reports. In the study performed by PwC (2011), publishing separate CSR reports were by far the most popular method to communicate on sustainability topics. In this sample, nearly 40% of the airlines published a separate sustainability report. Sustainability reports have been subject to criticism, especially when made in isolation from records of financial performance. The preferred method is seen to be the combination of these two reporting methods in an integrated report. Integrated reporting is a recent development that combines the analysis of financial and non-financial performance in one report - which is to demonstrate the connectivity between both financial and non-financial reporting. As some argue that integrated reporting is ‘the language for sustainable business’, others resist the idea of ‘soft’ CSR concepts being as material as ‘hard’ metrics. In practice, integrated reports vary little from annual reports with a CSR-section. In our sample, only 4 airlines choose to integrate CSR-related aspects in their annual report, as opposed to publishing a separate CSR-report. A clearly defined relationship between components of reporting and recognition of the priorities of different stakeholder groups is absent in 3 out of 4 integrated reports in this sample. While it is critical that the various components in the integrated report are tightly connected and related to each other, this may be difficult to achieve. Across the world, efforts are currently under way to develop an internationally accepted framework for integrated reporting (ACCA 2012). Although still in its infancy, integrated reporting became a mandatory listing requirement in South Africa.Instead of publishing complete reports, companies may also choose to provide information on CSR-related issues on their website. In this sample, 26% communicated information on their sustainability performance via their website, without publishing a separate. The airlines did so by creating a ‘sustainability tab’ on their website, posting updates on social and environmental information periodically. The world wide web has become an essential instrument for the communication of CSR issues (Moreno & Capriotti 2009). Among the 73 airlines investigated, well over 80% have a specific sustainability section on their corporate website. While former studies have often focused on either annual reports (Cormier and Gordon 2001) or on specific sustainability reports (PwC 2011), we focus on all the relevant communication channels for CSR disclosure into account. As the web is increasingly being used to communicate information on CSR, all kinds of reports provided proactively on the companies’ website are included in this research. Not included are other sources of information such as press releases, leaflets, advertisements or corporate videos.In conclusion, the purpose of CSR reporting, and by extension environmental reporting, is for firms to enhance transparency. In order to demonstrate credibility and successfully satisfy the information needs of the different stakeholder groups, disclosures must be of good quality. The contents of environmental reports should be reliable, relevant and comparable. 2.3.2 A sustainability reporting frameworkCSR and sustainability reporting are fairly new concepts. Sustainability accounting is still in early development and companies have to look outside of their accounting and management protocols to find guidance. In traditional financial accounting, there are strict rules and standards and compliance to the legislation is verified by external auditors. In voluntary disclosure, however, there is little legislation on how and what to disclose. The creation of sustainability reporting frameworks has provided some guidance to how organizations can disclose relevant and comprehensive information on their sustainability performance. Especially the use of performance indicators to measure environmental performance is seen as adding significant value in reporting practice: “Apart from displaying to stakeholders that the organization is taking seriously its environmental and social responsibilities, indicators are a central part of effective environmental management as they allow the tracking of improvements and thus assist in setting future priorities (Hooper and Lever 2002)”. However, the proliferation of CSR issues has led to the creation of organizations and agencies that manage several different indexes and rating systems without any unity of criteria (Márquez and Fombrum, 2005). As a results, corporate environmental information is difficult to use for external evaluation and benchmarking. Factors thwarting comparison of data are differences in definitions, measure problems and the provision of information that is hard to verify. Existing reporting frameworks that attempt to address these issues and provide sustainability reporting guidance include AccountAbility’s AA1000, the Accounting for Sustainability project or ISO 26001 (International Standard for social responsibility). Most frequently used are the G3 guidelines of The Global Reporting Initiative (GRI). The GRI is a Dutch multi-stakeholder organization that promotes economic, environmental and social?sustainability. It pioneered the world’s most commonly used sustainability reporting framework. The GRI defined internationally applicable and accepted guidelines - comparable to the IASB for the financial reporting. Core element of their approach is the ‘multi-stakeholder engagement process’. G3, a comprehensive framework, sets out the principles and appropriate performance indicators that organizations should use to measure and report their economic, environmental, and social performance. The GRI guidelines provide indicators for all three CSR perspectives: core indicators and additional indicators. Core indicators are of interest to most stakeholders, and are therefore relevant for most companies. Additional indicators are only of interest to some stakeholders and companies (GRI 2010). Because of the voluntary nature of the guidelines, organizations have the flexibility to decide what information to disclose, and what not to disclose. The cornerstone of the Framework are the Sustainability Reporting Guidelines. The latest version of the guidelines – known as the G3 Guidelines - was published in 2006. GRI guidelines contain the results of an on-going international discussion in which many different target groups are involved, including experts, NGO’s, consultants, auditing companies and associations. The diversity in parties involved in the development of the guidelines is key in the creation of a support base for the proposed guidelines. Although GRI is not free from criticism, it is regarded the most relevant institution in the context of CSR disclosure (Moneva et al. 2006). The majority of the airlines (60%) in the PwC-sample that published an annual corporate sustainability report used the GRI G3 guidelines as a basis. This number increased to 63% in our sample. A first draft of the fourth generation of GRI’s Guidelines –G4 – is currently available for public comment. It should improve on content in the current G3 Guidelines with strengthened technical definitions and improved clarity. G4’s final draft will be influenced by the results of this international public consultation. The GRI-website reads that the final draft will be ready for approval by GRI’s governance bodies in December 2012, before the planned launch in May 2013.To indicate that a report is GRI-based, report makers must declare themselves the level to which they have applied the GRI Reporting Framework via the system of ‘Application Levels’(see figure). Application Levels communicate what disclosures prescribed by the G3 Guidelines have and have not been made, and thus reflect the degree of transparency of a company’s report. A declaration of Application Level highlights which set and how many disclosures have been covered in the report. The levels are titled A, B or C with level A ranked most extensive. Companies can have their the self-declared level checked by the GRI. A plus (+) is added whenever the report is externally verified (see figure 1). The GRI emphasizes on their website that their Application Levels are not?grades, do?not relate to an assurance process and do not provide an opinion on the sustainability performance of the reporter nor on the quality of the information in the report. In conclusion, GRI developed the only internationally recognized CSR reporting standards and guidelines. The G3 guidelines provide the much needed uniformity in environmental reporting, and have been described as ‘essential to producing a balanced and reasonable report on an organization’s environmental performance’. On this basis, it may be justified to benchmark the quality of airlines’ environmental reporting against the GRI standards.Figure SEQ Figure \* ARABIC 1: GRI Application Levels2.3.3 Global CSR Disclosure RequirementsA patchwork of national regulations and international agreement has developed that now compels business to consider the social and environmental implications of their activities (Márquez and Fombrum 2005). Many countries have adopted conventional international standards regarding engine noise and have prescribed numerous directives for environmental conservation. According to the Initiative for responsible Investment at Harvard University (2012), there has been an increase in the number of social reporting requirements driven by regulatory bodies around the world. Regulatory incentives have played a key role in advancing the field of sustainability reporting. Hence, companies in the airline industry are confronted with numerous regulations and standards. Table 1 summarizes CSR disclosure requirements set by governments that are relevant to the aviation sector. The table provides an overview of the examination of environmental reporting policies in place today. As a relatively wealthy en developed region, the current CSR climate in Europe differs from those in the less developed parts of the world (CSR Europe 2009). Europe, frequently seen as a trendsetter in this area, has legally defined CSR duties, whilst social and environmental responsibilities may fall under voluntary CSR commitment elsewhere. According to the report by CSR Europe (2009), however, “the increasing interest in business opportunities associated with innovative CSR approaches, together with the growing stakeholder expectations for corporate accountability and responsible business practices both within and outside Europe, continue to push the CSR agenda forward (p2).” EUROPEDenmark 2009The country’s 1,100 largest listed companies are required to include use of natural resources and overall CSR performance in their annual report. France2009Listed companies are obliged to report social and environmental information in an annual report. Companies with >500 employees in high emitting sectors are required to publish GHG emissions.Germany2004Companies are required to report annually on key financial and non-financial indicators that materially affect the company.Greece2006An analysis of environmental and social aspects necessary for “an understanding of the company’s development, performance or position” should be included in the directors’ reports.Italy2007material environmental, social and governance (ESG) factors are to to be included in annual corporate reporting.The Netherlands1999Companies are required to publish information on their environmental performance and environmental management system.Sweden2007State-owned companies are required to publish sustainability reports in accordance with GRI guidelines.United Kingdom2010Listed companies are required to report on environmental issues if relevant to stakeholders' understanding. Companies that use more than 6,000MWh per year are to report on all emissions related to energy use.ASIA-PACIFICAustralia2001Listed companies are required to disclose violations of environmental legislation in their annual report.China2008Listed companies are required to disclose more information about their environmental record.India2008The board of directors’ reports must contain information on conservation of energy.Indonesia2007Companies involved in operations that affect natural resources are obligated to create, implement, and disclose CSR programs.Japan2005Specified companies are required to produce annual reports on their activities related to the environment. These companies must report on specific indicators including the amount of GHG emissions, amount of release of chemical substances, and total amount of waste generation.Malaysia 2007Listed companies are required to publish CSR information on a "comply or explain" basis.LATIN-AMERICAArgentina2008Local and international companies with >300 employees are required to generate annual sustainability reports in accordance with GRI guidelines.Ecuador 2002Companies causing emissions or spills that affect the environment must publish an annual report of environmental activities.NORTH-AMERICACanada1999Listed companies are required to provide information on specific pollutant emissions.United States2010Large emitters of GHG are to report data on their GHG emissions.AFRICASouth-Africa2009Listed companies are required to publish an integrated report. Table SEQ Table \* ARABIC 1: Overview of CSR disclosure requirements2.3.4 External Verification Consumers often find it difficult to determine whether or not a company’s internal operations live up to their standards for social responsibility (McWilliams et al 2006). Frequently, stakeholders express doubts about the reliability of information in CSR reports, pointing at inconsistencies between words and actions (‘greenwashing’). A research (pending publication) recently conducted by Leeds University and Euromed Management School analyzed over four thousand CSR reports, published over the past 10 years by companies all over the world. The researchers found numerous “unsubstantiated claims, gaps in data and inaccurate figures”. The level of asymmetric information concerning the companies’ internal operations may be addressed by the company itself or by an external party (McWilliams et al 2006). Feddersen and Gillian (2001) state that NGO’s, or activists, can play an important role in addressing the concern of consumers that perceive information on CSR as biased, coming from senior management. Responding to the issue of perceived asymmetry, more than a quarter (29%) of the airlines in our sample indicated that they had formed or planned to form partnerships with NGO’s. Moreover, companies started asking external parties, including most notably accounting firms, to verify their reports. An increasing amount of airlines, 46% in our sample compared to 37% in the earlier study by PwC, engage accounting firms to provide an assurance report on key metrics. They do so in order to promote transparency and to provide further confidence in the information presented in their CSR report. UPS, a US cargo airline, motivates the third-party verification of their 2011 sustainability report as follows: “we provide outside stakeholders with both assurance and verification of our carbon inventory, so they can trust our reporting and compare it widely (p57)”. Responding to increased demand, a niche within audit and assurance services emerged (Kolk, 2008) and the accounting firms (Big Four) have been expanding their sustainability services over the last decade. Currently, external auditing is only recommended by governments and the GRI. Concerning the value of an CSR audit, Gelinas (2007) stated that CR assurance provides both external and internal value to an organization. External value because 1) the firm demonstrates its commitment and seriousness in managing the CR agenda, 2) the overall trustworthiness to stakeholders is improved and 3) there is third party confirmation of compliance to stated standards/guidelines. The internal value is created by 1) increased confidence in the reliability and quality of assessed management systems, data collection, report preparation process and ultimately disclosed information and 2) professional third party recommendations for improvement of reporting is gained. In short, independent third party assurance adds credibility to a business’ reporting and the both the number of organizations demanding, and providing, this service is increasing. 2.4 CSR reporting and the airline industryStakeholder pressures, as well as the resulting political costs, are influenced by the industry to which a company belongs (Brammer and Millington 2006). Companies with a high environmental impact receive more attention from environmental lobby groups; these groups try to influence politicians and the general public to impose costs on those firms with poor environmental performance. Consequently, these firms have more incentives to disclose CSR information in general and environmental information in particular to reduce the impending costs (Deegan and Gordon 1996). For instance, chemical companies are likely to be more sensitive about disclosures to the public than companies in most other industries (Meek et al 1995). Previous literature confirms that industry membership is associated with corporate disclosures (Deegan and Gordon 1996, Holder-Webb et al 2008, Meek et al 1995).The first companies to publish environmental reports were those in the petro-chemical industry in the early-90’s. For example, Shell released its ‘Progress Towards Sustainable Development’ report back in 1991. Gamerschlag et al (2010) provided evidence of a significant systematic variation across industries in Germany regarding their propensity to make CSR disclosures. Consistent with some earlier work (e.g. Brammer and Pavelin 2006) the authors found that companies from so-called ‘‘environmentally-sensitive sectors’’ (such as the chemical and transportation industries) provide more information on environmental issues: ‘These companies have a long tradition of (and experience with) CSR campaigns, as they have been confronted with powerful stakeholders from the environmental movement since the early 80s. Accordingly, they proactively disclose information on their environmental performance to reduce the possible political costs arising from their despised activities (p16)’. One of the reasons for the airline industry to actively practice CSR is to make an effort to change the negative public opinion of the sector. Most public concerns lie with the emissions of toxic gasses into the atmosphere, and the noise generated by flying. These are both issues that are covered in the environmental section of the CSR report. The focus in this research lies with the environmental part of the sustainability report, since concerns and issues within the airline industry lie especially in that area. GRI provides sector guidance, makes reporting more relevant and user-friendly for organizations in diverse industries. However, GRI has not (yet) developed GRI standards for the airline industry specifically. PWC (2011) found that the lack of standards for key data parameters within the airline sector is an issue: airlines report on different indicators, or define indicators differently. This thwarts the comparability across the sector as a whole. A study by Hooper and Greenall (2005) demonstrated that, despite an increase in the availability of quantitative data and some consistency in the use of key performance indicators, comparing social and environmental performance across the aviation industry is fraught with difficulties. Variations in the exact definitions of the indicators used and the suite of functions embraced by the term “airline” are identified as fundamental obstacles to effective sector benchmarking (Hooper and Greenall 2005). In this research, this issue has been addressed. The scorecard designed for this study is designed in such a way that outcomes are not influenced by how a parameter has been defined by the writer of the report. It merely measures what relevant corporate sustainability indicators and initiatives airlines report on. 2.5 Environmental initiatives in the airline industryThe aviation community – airlines, airport operators, aircraft manufacturers and policymakers – has shown various environmental initiatives, allowing it to serve as a more sustainable industry. The International Air Transport Association (IATA) has established a four pillar strategy to achieve sustainable aviation. The strategy is described in IATA’s report ‘A global approach to reducing aviation emissions’ (2009). The strategy’s objective is to reduce emissions based on the four-pillars of investing in improved technology, improving operational efficiency, building and using efficient infrastructure, and using positive economic instruments to provide incentives (see figure 2).29813252724150The first pillar is aimed at significantly reducing the environmental footprint of the air transport industry through investing in technology. Emerging technologies, that answer to complex issues, pose challenges as well as opportunities to the aviation industry. Figure SEQ Figure \* ARABIC 2: The 4 pillar strategy proposed by IATARevolutionary changes in aircraft and engine design have been identified as having the potential to significantly reduce the magnitude of the environmental impact. The increasingly stringent international standards have created significant environmental constraints in the design and operation of aircraft. Many airlines point out that they work closely together with aircraft manufacturers to ensure improvements in airframe and engine technology. Both operators and NGO’s increasingly encourage aircraft manufacturers to emphasize efficiency gains in their product development. As a result of cooperation within the aviation industry, Boeing introduced the Boeing 787 Dreamliner in 2009. The aircraft, with low emission engines and made primarily of advanced composite materials, is considered the most environmentally advanced in the world. However, long-term solutions such as fleet modernization must be combined with quick fixes involving improvements to airplanes that are already in the air. Jet configurations maximizing overall aircraft engine efficiency include the installation of winglets and the frequent washing of engines. Winglets mounted on the wingtips of aircraft improve the aerodynamics and lower jet fuel consumption. Engine/compressor washing removes surface contaminants and lowers the engine’s operating temperature, which extends engine life and reduces its fuel consumption.Another important aspect of improving aviation technology is the development of alternative fuels. Currently, the targeted economies of scale do not allow sustainable biofuel to become available in sufficient quantities at an acceptable cost. Viable sources for low-carbon biofuel have been identified, however, the challenge that now lies ahead is to industrialize this process. Many airlines in our sample state in their report that they conduct or support testing of alternative fuels. In 2011 alone, 6 operators in our sample have conducted one or more commercial flights on biofuel. The objective of the second pillar is to improve the efficiency of aircraft operations. More efficient aircraft operations can save fuel and minimize CO2 emissions. IATA recommends the implementation of advanced navigational aircraft technology, enabling procedures such as Required Navigation Performance (RNP). RNP allows airplanes to fly a optimal path between two 3D-defined points in space.Another key for saving fuel is weight reduction; the lighter the aircraft, the less fuel it burns. Common weight-reducing initiatives include the use of lighter equipment (e.g. Air- France KLM), the introduction of passenger luggage weight limits (e.g. EasyJet) and optimizing the amount of drinking water carried onboard (e.g. Qantas). During this study, it became evident that some carriers will do anything to save fuel. Extreme weight-reduction measures that were encountered in the reports include Ryanair ordering to their flight crew to lose weight, American Airlines removing one olive from every salad served on board its flights and “Please toilet before boarding” - a voice from the China Southern check-in counters to remind customers to use the lavatory before getting on the plane. Pillar 3, efficient infrastructure, is to reduce carbon emissions through improved flight profile optimization. According to IATA, air traffic control infrastructure modernization presents a major opportunity for fuel and CO2 reductions in the near term. It promotes the next generation Air Traffic Management system to find the most fuel efficient flight path. The development and use of new flight operational practices is taking off. An example of a new operational practice is the Continuous Descent Approach (CDA), in which pilots take a continuous glide path toward their arrival airport rather than “stepping down” in levels of altitude, minimizing noise impact and saving CO2 during take-off and landing. Economic instruments, described by the fourth pillar, are aimed at stimulating the reduction of emission through carbon offset programs and emission trading. In an emissions trading scheme, such as the EU ETS, airline operators can choose the least costly option to meet its emissions quota. It can lower its production, improve its energy efficiency, or buy extra allowances from other entities that emit less than their quota (IATA 2009). From the analysis, it became clear that over half (or 53%) of the airlines are currently preparing themselves for the inclusion of aviation into the European Trading Scheme. Another approach to reducing emissions is to offset carbon emissions. A carbon offset is a certified financial instrument to reduce emissions and is performed in order to compensate for or to offset an emission made elsewhere. In the reports from the sample, 22 airline companies (or 40%) indicated to have some sort of carbon offset program. Offsets are typically achieved through tree-planting initiatives or financial support, by either the entity or paid for by the passenger, of projects that reduce the emission of greenhouse gases. Important environmental issues that fall outside of the scope of IATA’s four pillars include fuel dumping, deicing procedures and noise impact. The dumping of fuel (or fuel jettison) under exceptional circumstances cannot be avoided. When aircrafts are forced to make an unscheduled landing for technical or medical reasons, they often need to empty the fuel tanks until the aircraft’s maximum permissible landing weight is reached. Although fuel dumping is usually accomplished at a high enough altitude, where the fuel will dissipate before reaching the ground, it causes air pollution. GRI guidelines prescribe aircraft operators to report on the occurrences of fuel jettison and the amount of fuel jettisoned. When operating in cold climates, the ice and frost that forms on the fuselage and wings of aircraft must be removed before take-off for safety reasons. The application of chemicals - a mixture of propylene glycol, salt and hot water - is used for deicing. If not captured and threaded, the chemicals and salt may reach water bodies in concentrations that are toxic to the ecosystems. Initiatives to mitigate the environmental impact of deicing include capturing and threading deicing runoff (e.g. Air France-KLM and replacing chemical deicing fluids with bioglycol, a new environmentally friendly deicing fluid made from 98 percent soybean (e.g. US Airways). Concerning the hindrance caused by noise, there are aircraft noise regulations and standard that apply. Any aircraft obtaining certification for operation since January 2006 is required to meet the noise certification limits set out by the International Civil Aviation Organization (ICAO), also referred to as the ‘ICAO Chapter 4 requirements’. Flight operations account by far for the biggest consumption of energy. However, more and more airlines apply sustainable practices not only in the air but also on the ground. Airlines are increasingly seeking to minimize their environmental impact by examining their ground operations as well. Initiatives in place includes responsible utilization of resources by ground operators, maintenance facilities and offices in order to reduce consumption of energy, water and paper. Another area of focus within this aspect is the amount of waste produced. Solutions common in the airline industry are the recycling of onboard waste, proper handling of chemicals and the evaluation of biodegradable materials. Chapter 3: Research MethodologyIn the following paragraphs, the research methodology will be presented. Starting with a presentation of the hypotheses that will be utilized in order to answer the research question: What is the overall quality of corporate sustainability reporting in the airline industry, and how do different regions compare? This will be followed by an illustration of the sample-composition, after which the methodology will be introduced and elaborated on.3.1 Hypotheses Due to its significant environmental impact, the aviation sector is in need of legitimizing its operations to protect the industry’s reputation and secure long term viability. In order to do this, effective communication to stakeholders is key. Corporate disclosures must be of a good quality if they are to be effective. Environmental reports are a critical part of the industry’s attempts to restore or enhance stakeholder and investor confidence. Following from the theories previously discussed, it is argued that the higher the quality of reporting, the more successful the industry’s legitimizing strategy is presumed to be and the higher its stakeholder influence (Adenibi 2005) . Achieving the objective of airlines to satisfy stakeholders by demonstrating accountability and transparency to stakeholder requires standards that enable end-users to easily asses and compare environmental performance of individual airlines as stated in the environmental report. Standardization is a trend, and the GRI-framework has become the de facto standard for sustainability reporting. Up to 2010, the majority of airlines used GRI G3 guidelines as a basis for their corporate sustainability report (PwC 2011). The following hypothesis helps us gain an insight into the extent GRI helps aviation companies to enhance the quality of their report: H1: Using the GRI-framework for sustainability reporting increases airlines’ environmental disclosure quality. Business norms and standards, regulatory frameworks and stakeholder demand for CSR can vary substantially across nations and regions (McWilliams et al 2006). Differences in the environment for CSR are likely to affect CSR disclosures. Regulatory incentives and cultural aspects influence the issues which companies select as worthy of disclosure (Matten and Moon 2008). As table 1 has shown, legislation involving CSR reporting varies among countries. A number of companies in Europe (e.g. the UK, France, and the Netherlands) have passed laws requiring companies to identify and disclose social and environmental information according to specific guidelines. This legal obligation strongly influences the levels of disclosure, since companies in this region will disclose much more CSR information than their counterparts from regions that lack legislation (Kolk et al. 2001). In contrast to the European Union, requirements for companies to disclose nonfinancial information are limited in the United States (Kolk et al. 2001). What is more, legislation in Africa and the Middle East is entirely absent. Since CSR disclosures tend to be most pervasive in Europe and, to a lesser degree, in the United States and Asia-Pacific, we expect that companies provide relatively more CSR information when they deal with stakeholders from Europe, the US or the Asia-Pacific region. Applying political cost theory, airlines located in regions with stringent legislation on CSR reporting are expected to report more extensively on the subject, resulting in increased quality of their report. It is hypothesized that there is a significant systematic variation across continents regarding the propensity to make CSR disclosures. The difference is expected to be found when comparing airlines from the North-America, Europe and the Asia Pacific region to their counterparts in Latin-America, Africa and the Middle East. H2: Airlines in North-America, Europe and Asia-Pacific publish environmental rapports of higher quality, compared to their counterparts in the rest of the world.Moreover, airlines can have or feel the obligation to report on CSR performance when they are member of an alliance. The alliances OneWorld, Skyteam and Star Alliance all drafted a Corporate Social Responsibility Statement, setting out the commitments of all alliance-members. Following the theory of political cost, it is therefore also expected that member-airlines publish environmental reporting of higher quality.H3: Alliance-membership increases airlines’ environmental disclosure quality. Airline companies that wish to demonstrate their accountability and transparency do good by involving an external party to provide assurance on the reported data. Lober et al (1997) identified third-party verification as a trend in sustainability reporting. Verification of the (integrated) report can play an important role in providing stakeholders with assurance that the corporate sustainability report is accurate, complete and unbiased. Consequently, external verification increases reliability and therefore helps improve comparability and quality. The PwC-analysis, in which only 37% of corporate sustainability reports were independently verified, concluded that verification remains atypical. However, since organizations such as NGOs, engineering firms, and accounting firms are working hard to improve and expand their sustainability assurance business, we expect to find a higher percentage in our, more recent, sample of corporate sustainability reports. Moreover, we hypothesize that external verification increases airlines’ environmental disclosure quality. In order to test this hypothesis, a subsample will be created comprising of CSR and integrated reports alone. As companies generally do not provide assurance on their website content, and financial audits covering the sustainability elements of an annual report are rather recent and still exceptional, these rapports are removed from the selection. H4: Audited environmental disclosures are of better quality than unaudited environmental disclosures.3.2 Sample Following Cowper-Smith and Grosbois (2011), member airlines of the three major airline alliances are selected for inclusion in this study: Star Alliance (18 members), OneWorld (11 members) and Skyteam (15 members ). The total of 44 members represent members from all parts of the world and account for the majority of airline traffic. Following the analysis by PwC (2011), companies from the Top 25 Airline Business are added to the sample. Moreover, operators from the top 5 airlines for all regions (Africa, Asia-Pacific, Europe, Latin America, Middle-East, Latin- and North-America) are included to ensure a solid coverage of all geographies. Finally, the Top 5 low-cost carriers and the Top 5 cargo carriers are also added to the sample to make sure those segments are covered as well. A sample including the 73 largest and most influential actors in the air travel segment is created. Out of the 73 global and regional airlines (see appendix table 1), 61 disclosed environmental information via the communication channels proposed in chapter 2. Since the popularity of corporate websites as the preferred avenue for communicating such information is increasing, all kinds of reports provided proactively on the companies’ website (as of September 2012) are included in this research. Not included are other sources of information such as press releases, leaflets, advertisements or corporate videos. Out of the 61 airlines in our sample that communicated environmental information, 6 used a language other than English. Concerning these 6 airlines, it was able to identify what medium had been utilized to communicate the environmental information. However, the reports were excluded from the content-specific analysis. When we discuss specific reporting trends in this paper, we are generally referring to the 55 airlines in the sample that published a report in English. In all but four cases, this was the report covering 2011.3.3 Methodology The research for this thesis will be carried out using a mixed method approach. Both qualitative and quantitative analysis are employed to answer the research question. A content analysis will be performed for data collection. Previous literature suggests that content analysis provides valid results for corporate social and environmental reporting research (Deegan and Gordon 1996, Gray et al 1995b, Guthrie and Farneti 2008).This method best suites the exploratory nature of the research question and looks directly at communication, therefore getting to the central aspect of what and how environmental aspects are communicated in reports. Hence, a hand-collected set of specific CSR data is used, extracted from the reports through content analysis. The level of information provided in the reports are translated into scores that are later used to draw conclusions on. Independent sample t-tests are utilized in order to test the hypotheses. However, as data available on this particular subject is limited, quantitative statistical analysis is thwarted. Following the approach used by Kolk (2008), airline companies are scrutinized for the information published on their website, or their most recent corporate report, that dealt with environmental sustainability issues. Taken into consideration are either integrated reports or, if not available, CSR reports. If these are not available, the annual financial report is used for analysis, if it contained information on sustainability. If no report of any kind is available, corporate websites were visited to search for sustainability tabs presenting relevant information.Websites were visited to collect reports, and if this did not yield results, the companies were contacted by mail. Information outside of the gathered reports or sustainability tabs, such as press releases or advertisements, are not taken into consideration. Moreover, only reports provided in English are analyzed. In order to determine the quality of the reports, a CSR disclosure index is constructed, influenced by the GRI and IATA’s strategy framework. CSR reports and annual reports thus collected are examined in a qualitative manner in order to determine what CSR-initiatives have been taken and to what level there exists reporting on specific initiatives. Following Cowper-Smith and Grosbois (2011), the CSR topics are organized into a framework, divided into various themes and initiatives. The reports will be evaluated and scored per environmental indicator and per CSR initiative (see Appendix table 2). Since the GRI framework is widely used around the world, indicators and themes were derived from the GRI evaluation guidelines. Using GRI will improve the results’ validity, as the guidelines can be assumed to reflect CSR’s ‘real meaning’ (p10). Subsequently, environmental initiatives linked to the IATA four pillar strategy have been added. A CSR disclosure index, or Scorecard, is constructed in order to test the stated hypotheses. A report’s quality is evaluated on the basis of the total scores achieved out of sixty-eight point. The Scorecard consists of 2 parts:Part I Environmental Indicators and their Provision (max. 13 points)This part of the scorecard measures the completeness of the reported indicators. We search for relevant measures – and verify whether the measures that a reader would expect are disclosed. On the one hand, we have reporting on what goes in. Examples from the scorecard include the consumption of fuel, electricity and water. On the other hand, there should be reporting of what goes out:, level of noise, quantity of (hazardous) waste and the emission of greenhouse gasses (CO2, NOx, SO2 and CH4). Airlines receive 1 point per reported indicator and a total of 13 point can be awarded in this part. Part II: CSR initiatives within the environmental dimension and their adoption (max. 55 points) The second part of the scorecard checks for initiatives taken by operators to limit their environmental footprint. As mentioned before, initiatives were deducted from the IATA strategy and include, for example, ‘reduce fuel consumption’ and ‘form partnerships with NGO’s’. Per sustainability initiative described, 1 point will be given when an objective is stated but not made concrete. The presence of an actual measurement or target indicates whether a clear goal has been set. An additional point will be given when both a defined goal, specifying the baseline or reduction amount/percentage, and a timeframe is provided. Two points for an initiative is only awarded when airlines provide additional information concerning their (aimed) achievement that is descriptive and verifiable. The magnitude or achievement of the reduction goal is not considered. No points are awarded for an initiative when an airlines fails to mention it in the report. In order to mitigate content analysis’ known risk of subjectivity, a systematic and objective approach was adopted to perform score the airlines in the sample. The scorecard that is used to perform this research focuses on the completeness of corporate sustainability reporting. It does not give an opinion on the sustainability performance of the reporting organization, nor on the quality of the reported data. It does, however, provide insight into the extent to which companies give details about the sustainability of their businesses. Chapter 4: Results 4.1 Reflection on sample Of 73 selected companies, 61 (or 84%) reported on sustainability, in whatever form. This considerably high level of environmental reporting is reflective of the industry’s high level of environmental impact. As to the spread of the 61 environmental disclosures over the regions, considering companies’ country of origin, slightly over 30% is European. A quarter (25%) of the disclosures originated from the Asia-Pacific region, whilst North-American airlines account for 18%, with the remainder coming from different emerging economies: Latin America, the Middle East, and Africa (respectively 10%, 8% and 6%). This mirrors to some extent the overall pattern of sustainability reporting, in which European companies have been most active, currently closely followed by companies from the Asia-Pacific region, while their US counterparts lag behind (KPMG 2005, Kolk 2008). Reports from North-America were exclusively CSR reports, whilst African airlines use their annual report to communicate their commitment to sustainability. Remarkably, all 4 integrated reports in this study originated from the Asia Pacific region. Figure SEQ Figure \* ARABIC 3: Corporate sustainability reporting per geographical areaAs the pie-chart (figure 4) shows, publishing a separate report is the most popular reporting medium. The majority of airlines (38%) issued a separate CSR report. Although integrated reporting is still in its infancy, 4 airlines (or 6%) managed to integrate CSR information into their annual reports. 11 operators (or 15%) dedicated a separate section in their annual report to the subject, whilst 19 (or 26%) used a tab on their website to communicate the CSR commitments. Relatively few airlines, 11 out of 73 (or 15%), did not communicate on CSR topics at all. Type of reportOccurrence (#) Percentage (%)Average score on quality (pts)Integrated report45,5 25,0Separate CSR report2737,030,4CSR-Section in annual report 1115,07,9Sustainability-tab on website1926,08,2No information1216,5(0)Total =SUM(ABOVE) 73 =SUM(ABOVE) 10019,0Figure SEQ Figure \* ARABIC 4: The format of reportsTable SEQ Table \* ARABIC 2: Format and quality of reportingThe average score on quality denotes how many points, out of 68, were granted on average. From table 2 it is evident that separate CSR reports generally score highest on quality, followed by integrated reports (30.4 and 25 points, respectively). Dedicated CSR-sections in the annual statement score particularly low, as well as the sustainability tab (7.9 en 8.2 points, respectively). However, it cannot be concluded that one type of report is necessarily better than another. For example, All Nippon Airways published an integrated report that scored very high at 54 points. In contrary, Aegean’s separate CSR report scored 11 points on the scale of 68, which is considerably low compared to the average overall score of 19 points (scores of zero excluded).The average score covering all reports is relatively low at 19 points, especially considering that 68 points could have been ‘earned’. The low average score is caused mainly by the fact that there is still a lack of quantification in most reporting. Although most airlines report on their environmental policies, information relating to actual environmental activity or performance was poorly disclosed. There are several possible explanations for this lack of quantification in the reporting of environmental issues. For one, it is likely that the airlines do not yet have a system in place for accurately collecting or measuring the appropriate environmental data, since environmental reporting is still relatively new. Moreover, the voluntary nature of the whole environmental reporting process could be a factor. From the CSR and integrated reports, 46% were audited (see figure 5). The majority of the verification is carried out by accounting firms (75%), with the remainder being performed by certification bodies (17%) and consultants (8%). Figure SEQ Figure \* ARABIC 5: Audit providers 4.2 Descriptive statisticsFor the content analysis, 55 reports of whatever form containing data on a company’s environmental indicators and commitments have been analyzed. On the basis of the GRI framework’s core indicators and the four pillars proposed by IATA, content analysis was applied to detect the content of CSR information provided by 55 of the largest airline companies in the world. The hypotheses put forward in the third chapter and the results of the research will now be discussed.H1: Using the GRI-framework for sustainability reporting increases airlines’ environmental disclosure quality. In our sample, well over half (or 63%) of the separate sustainability reports followed the guidelines proposed by the G3 Guidelines proposed by GRI. This is consistent with previous research, which found that around 60% used the GRI reporting framework (PwC 2011). The remaining reports make no mention of any guidelines used. Moreover, 2 out of the 4 integrated reports followed GRI guidelines. The GRI-framework is not being followed for sections in annual reports and website content. This is not surprising, given that the information generally presented in the annual report and on the company website is rather brief and shallow. It is evident that the GRI framework is well-known, at least by those airlines that publish stand-alone reports.The results concerning the effect of GRI on the report-quality are presented in table 3 below. The quality of separate CSR reports and CSR-sections in the annual statements increases in the case of GRI-guidelines being applied. The quality-results presented for the integrated reports are against earlier expectations. The Non-GRI reports score much better, on average. This was in part caused by the report of All Nippon Airways, scoring 54 points without applying GRI guide lines. As the results are based on only 4 observations, any conclusions drawn concerning integrated reporting and GRI will remain weak. Looking at the entire sample, the average score in the case of GRI lies higher (29,4 points against 13,3 points). Occurrence (#)Percentage(%)Average score on quality (pts)Integrated reportGRI25017,5Non-GRI25032,5Separate CSR reportGRI146432,4Non-GRI83627,0CSR-section in the annual reportGRI1911,0Non-GRI10917,7Sustainability-tab on websiteGRI(0)(0)(0)Non-GRI181008,2TotalGRI173129,4Non-GRI386913,3Table SEQ Table \* ARABIC 3: Use of GRISince GRI is hardly used for sections in annual reports and website content, these type or reports were extracted from the sample to increase the validity of results from the independent sample t-test. The subsample consists of separate CSR reports (22) and integrated reports (4).MeanStandard deviationNGRI reports30.512.88216Non-GRI reports28.111.9010Independent sample t-test (equal variances assumed), t(24)= 0.46, p(1) >.05Table SEQ Table \* ARABIC 4: GRI and qualityEvident from table 4 is that the standard deviation is too large for the test to have much power. The bigger the standard deviation, the more unreliable the mean. A standard deviation of 12.8 such as reported in Table 4, in combination with a mean of 30.5, indicates that there is a high chance that the mean is not representative. The results from the t-test demonstrate that the difference in quality between GRI and non-GRI reports is not significant. Thus, the first hypothesis is rejected. Using GRI does not significantly influence the overall quality of the report. Taking into consideration that GRI focuses on environmental indicators, and less on initiatives, the t-test was re-performed using only the scores to the first part of the scorecard. Thus, the report-quality is now represented by the achieved scores on the initiatives. See table 5 for results. MeanStandard deviationNGRI reports7.563.9316Non-GRI reports4.203.4610Independent sample t-test (equal variances assumed), t(24)= 2.13, p(1) <.025Table SEQ Table \* ARABIC 5: GRI and indicator qualityThe average scores on the indicators are 7.6 (GRI) and 4.2 (non-GRI), out of 13. The difference in indicator-quality is found to be significant. Airline companies that follow the GRI guidelines for environmental disclosure, report more extensively on the indicators than companies that do not follow GRI. Although the first hypothesis was rejected, this finding presents some nuance to our judgement. An outcome worth mentioning is that only 27% of the sampled airlines scored 6 or more out of 13 in the GRI section. This indicates that there is much room for improvement. Moreover, considering the voluntary and flexible nature of CSR reporting, it might suggest the need for a reporting guideline that is less voluntary.H3: Alliance-membership increases airlines’ environmental disclosure quality.Out of the sample, 39 airlines have joined one of the passenger aviation alliances: OneWorld (8), Star Alliance (19) or Skyteam (12). Further, world’s largest airfreight carriers (4) and low cost carriers (3) were grouped together in the overview. Analyzing the average scores (see table 6), airfreight carriers clearly report more thorough on their environmental performance (25.8 pts) than any other of the groupings. Surprisingly, low cost carriers (20,3) rank high as the 3rd on average. Concerning the alliances; members, independent on which one of 3 alliances they joined, score higher on average than non-members. Alliance / Top Report count (#)Average score on quality (pts)Top 5 Cargo425,8OneWorld820,4Top 5 Low Cost Carriers320,3Skyteam1217,5Star Alliance 1917,2None915,6Total =SUM(ABOVE) 5518,2Table SEQ Table \* ARABIC 6: Quality by Alliance/TopFor the independent sample t-test, the sample was divided into 2 groups: alliance members, and non-alliance members (including the cargo and low-cost airlines).MeanStandard deviationNAlliance members17,9212.88239Non-alliance members19,0611.9016Independent sample t-test (equal variances assumed), t(24)= -0.18, p(1) >.05Table SEQ Table \* ARABIC 7: Quality and Alliance-membershipResults from table 7 show that alliance-members score lower, on average, on reporting quality than non-members. The difference is found to insignificant, but it is against earlier expectations. Hypothesis 3 is rejected.Results may have been influenced by the non-member cargo airlines (4), scoring particularly high. The cargo airlines perform different flight operations and their disclosure address other groups of stakeholders. As such, their environmental reporting may not be representative of that of other airlines and this research should not have included cargo-airlines in the sample.H4: Audited environmental disclosures are of better quality than unaudited environmental disclosures. In order to test this hypothesis, a subsample was created comprising of only CSR and integrated reports. Although an external audit is not required, almost half (or 46%) of the 26 companies in the adjusted sample have resorted to external verification of their report: verification is no longer atypical. Of those companies that seek such assurance, only a few mention a reason. Motivations that are given include that of enhancing credibility, continuous improvement and responsibility/duty.MeanStandard deviationNAudited reports32.4212.9212Unaudited reports27.1411.7114Independent sample t-test (equal variances assumed), t(24)= 1.05, p(1 >.05Table SEQ Table \* ARABIC 8 Quality and External verification Audited reports are generally of higher quality: they score 32.4 on average, as opposed to unaudited reports scoring substantially lower at 27.1 on average (see table 8). However, with an average score of 32.4 points on a scale of 68, verification is no guarantee for a comprehensive report. It is obvious from table 9 that external verification, also referred to as third-party assurance, is prevalent in Europe (4 out of 6 reports externally verified) and the Asia Pacific region (5 out of 8 reports externally verified). Particularly American companies stand out for the lack of verification; only 20% of North-American aircraft operators asked for an external judgment and the one Latin-American report in the subsample contained no assurance statement.Concluding from an independent sample t-test, the difference in quality between audited and unaudited reports is not significant. Therefore H4 is rejected. Again, this may be attributed to the large standard deviations compared to the mean. Additionally, the analysis is limited due to the disappointingly small size of the subsample and limited availability of material, preventing strong conclusions from being drawn. ContinentReport count (#)Externally verified (#)Externally verified (%)Asia Pacific8562,5Europe 6466,7North-America10220,0Middle-East11100,0Latin-America100Africa000Total =SUM(ABOVE) 26 =SUM(ABOVE) 1246,2Table SEQ Table \* ARABIC 9 External Verification by geographical locationH2: Airlines in North-America, Europe and Asia-Pacific publish environmental rapports of higher quality, compared to their counterparts in the rest of the world.North-American or US companies are most explicit in their description of environmental indicators and initiatives (average score of 27,8, see table 10). Airline operators from the Asia Pacific region and Europe are also relatively specific about their environmental action (average scores of 21.2 and 16.2, respectively). The Middle East follows, scoring 12.4 on average. Compared to their counterparts, African and South-American companies provide very little information on environmental issues (scoring 9.5 and 3.0, respectively): none of the companies from those areas reported quantitatively on the core-indicators fuel consumption, emissions, water or waste. Although no further statistical analysis was performed on the average scores, it is evident from the table that great differences in quality of environmental reporting exist among continents. Airlines in the US, Europe and Asia-Pacific publish environmental rapports that are on average of higher quality than their counterparts from other regions. Hence, the third hypothesis is accepted. ContinentReport Count (#)Average score on quality (pts)North-America1127,8Asia Pacific1421,2Europe 1916,2Middle-East512,4South-America29,5Africa43,0Total =SUM(ABOVE) 5518,2Table SEQ Table \* ARABIC 10 : Quality by geographical locationThe analysis presented in this thesis enabled us to conclude the following: Policies in place today concerning the reporting of environmental data differ substantially among regions. Report quality, on average, is higher in regions that are under legislation. Companies from North America and the Asia-Pacific region disclose considerably more information on environmental aspects. Considering the stringent legislation in place, this is consistent with the political cost theory, proposing that companies under regulation have strong incentives to reduce their political costs through CSR disclosures. European reports are abundant in number, but lag behind in quality. The majority of reports from the Middle-East and Latin-America score even lower – reflecting the lack of depth, quantification and rigor in the reporting. Overall, companies in these regions fail to sufficiently use criteria or referents to guarantee their claims about their corporate behavior. Seemingly, governments’ role is key in the debate on sustainability, as they have the ability to influence report quality though regulation. These findings are important, suggesting that governments could play a role in assisting airlines to take CSR reporting to the next level.The big four accountancy firms continue to dominate the CR assurance market with 75 percent of the verification statements. Verification is no longer atypical, but doesn’t guarantee a comprehensive report. However, generally speaking, the audited reports in our sample are of higher quality than unaudited ones. The same goes for alliance-members: their reports score higher than reports published by non-members.The issues of reliability and validity in this research are concurrent with those addressed in other research methods. The reliability of content analysis research refers to its stability. This issue was, in part, covered by performing all analysis’ myself, guarantying consistent re-coding. Concerning the validity of the data, the main problem is the that drawing conclusion on the analysis is challenging. This issue was addressed by keeping away from strong and explicit conclusions, keeping in mind the nature and generalizability of conclusions.Only one of the hypotheses has been accepted. The limited availability of data (small N) and diverse scores on quality (large standard deviation) have thwarted the analysis. Based on this work, however, other researchers might come up with a better technique in which the standard deviation of report quality is smaller. Thus, I find the developed technique important enough to be shared even though few significant differences were found. Chapter 5: Conclusion5.1 ConclusionsThe indisputable environmental impact of air travel gets a lot of attention in the media as well as in the policy debates. The aviation sector as a whole working hard to develop new technologies in order to allow aviation to serve as a more sustainable industry. Airline companies are, themselves, focused on the environmental impact of their operations. These emerging technologies, that answer to complex issues, pose challenges as well as opportunities to the aviation industry. Airlines are increasingly measuring, reporting and managing their carbon footprint. Moreover, the inclusion of airlines flying to and from Europe in the EU Emissions Trading System has fired extra interest in emissions data. Previous research shows that corporate social and environmental disclosure has grown considerably over the last 20 years. It encompasses both the voluntary and mandatory disclosure made by companies regarding issues that are important to a wide range of stakeholders, thus covering more than pure economic concerns. The past two decades have seen a steady evolution of corporate social, environmental and ethical reporting, with sustainability reporting undergoing particularly significant developments (ACCA 2012). Reporting ultimately serves as the platform for action. A near 85% of airlines in our sample reported on sustainability, in whatever form or language. Compared to previous studies that investigated sustainability reporting by airline operators, this 84% is a remarkable increase. The analysis of CSR-data presented shows that the scope and level of environmental efforts varies tenfold across the industry. Whilst there is evidence of increasing sophistication in the development of environmental disclosure, the maturity or reporting content and style varies considerably. The results of the analysis corroborate the conclusion that the quality of environmental reporting within the aviation sector is still low. Reasons proposed to explain this include the considerable ‘newness’ of the whole environmental reporting phenomenon and the flexibility/voluntary nature of CSR reporting. Despite overall scores being low, there is evidence of a development towards a more detailed and concrete reporting, leading to improved quality and relevance of information. With this progress, it can also be concluded that comparability between companies has improved; comparability over time improves due to a wide-spread use of the GRI guidelines, that have helped improve the quality in setting standard. Using the GRI reporting requirements and IATA proposals for benchmarking, this thesis primarily aimed at evaluating the quality of environmental reporting within the aviation sector. In order to achieve this objective, the theoretical rationale for voluntary (environmental) disclosure was explored. It was explained that a high quality of environmental reporting was particularly necessary to manage the negative stakeholder perception of the industry. And, following from previous literature, proper communication is key to responding to stakeholders’ demands. Following the accepted GRI guidelines helps construct credible, straightforward and relevant disclosures, thus increasing report quality. The framework supports companies in their reporting process, increasing quality of the outcomes. The fact that GRI is gaining territory as leading standard setter predicts that the quality and level of disclosures will keep improving. Moreover, comparability will improve as more airlines report according to the proposed framework. The reliability of environmental disclosures has improved by both the strengthened verifiability due to more coherent and solid reporting. As we have seen, policies in place today concerning the reporting of environmental data differ substantially among regions. Much of today’s non-financial reporting is driven by regulatory requirements. The aviation industry is witnessing an increase in regulations and reporting requirements. In particular, the inclusion of airlines flying to and from Europe in the EU Emissions Trading System has forced the publication of emissions data. Report quality, on average, is higher in regions that are under legislation. Governments’ role is key in the debate on sustainability, as they have the ability to influence report quality though regulation. Taking this a step further - this could be fertile ground for government and industry working together in partnership to confront future environmental challenges. The currently flexible and voluntary nature of the GRI framework for sustainability reporting may have to become less flexible and voluntary, possible supported by sharpened legislation, in order for them to become internationally accepted. This will help firms in collecting and measuring the appropriate information. Overall, the reliability of the reports published by the airline sector seem to have improved and there seems to be a continual increasing development towards meeting stakeholder requests. This is in part caused by the 1) increase in airlines seeking assurance, 2) progress of verifiability due to the increase use of concrete and standardized reporting and 3) the enhancement of the external assurance market. The big four accountancy firms continue to dominate the CR assurance market with 75 percent of the verification statements. Verification is no longer atypical, but doesn’t guarantee a comprehensive report. Audited reports have not proven to be of significantly higher quality. The same goes for alliance-members: their reports generally score higher on average than reports published by non-members, but the difference is not significant. Companies from North America and the Asia-Pacific region disclose considerably more information on environmental CSR aspects. Considering the stringent legislation in place, this is consistent with the political cost theory, proposing that companies under regulation have strong incentives to reduce their political costs through CSR disclosures. European reports lag behind in quality, but are abundant in number. The majority of reports from the Middle-East and Latin-America studied in this paper lack depth, quantification and rigor. Overall, these companies fail to sufficiently use criteria or referents to guarantee their claims about their corporate behavior. Right now, starting at the top, the world’s largest airlines are taking the lead. But there is still room for improvement. A minority of companies, mainly those in Africa, seem to transmit a view of CSR in their report that is limited to actions of patronage or sponsoring and the creation of foundations. “Ethiopian celebrated Christmas with orphans” reads the Ethiopian’s CSR-newsletter. This is in pale contrast to KLM currently operating scheduled flights with aircrafts fueled by bio-jets. 5.2 LimitationsAlthough the evidence obtained in this research suggests a poor quality of environmental reporting within the airline industry, more tests should be performed in order to reach a more definitive conclusion. More in-depth analysis on the average scores as per continent could have been helpful to draw stronger conclusions. Moreover, the research evaluated environmental reports for one year only. Undertaking a multi-year evaluation will allow for a reliable trend to be established. As with any research method, there are limitations to using content analysis. This particular analysis was especially limited by availability of material, limiting inferences to be drawn. Sample size, and insufficient sustainability reporting by airlines, tend to invalidate my conclusions. The sample contains only 73 out of an estimated 4,000 airline companies in the whole world. Included are all alliance-members and operators that belong to some sort of ‘top list’. It therefore represents only those airline companies that are biggest and have the most capital. Thus, the results cannot be extended to smaller firms. I believe that these companies represent the cutting-edge – and indicate the trends – of the aviation business world, but it would be desirable to repeat this analysis with a larger sample that includes more aircraft operators of different sizes and types.Another limitation to the research method employed is the inability to assess causality. Causal relationships can be identified from the results, however, relationships and correlation between variables cannot be proven.A more pressing limitation, however, is that this thesis is focused on disclosures, not on a company’s overall CSR performance. It is largely focused on the question of whether companies report - not what they report. Companies’ environmental performances may be bad, but they make abundant CSR disclosures. This thesis did not aim to provide a critique of the facts explored in the disclosures or on the industry’s important role in the environmental sustainability debate. However, the fact remains that it captures only part of the bigger sustainability picture. Although beyond the scope of this particular work, it might be the time to be less occupied with the number of companies that release a report and more occupied with the truthfulness of its content.5.3 Suggestions for further research This exploratory study can be a starting point for further in-depth analyses into sustainability. A useful direction of further research in this area would also be to identify common characteristics of the airlines that are relatively advanced in the reporting of CSR initiatives. Factors such as their geographical location (being more exact than the continent) and respective national regulations or standards could be thoroughly analyzed in order to better understand the motivations and rationale behind CSR adoption (or the lack of it). More in-depth analysis could be performed on the difference in quality between the continents. Further research could also study the influential role of governments and standard setters. 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Graves (1997). “The corporate social performance-financial performance link.” Strategic Management Journal, 18 (4): 303-319.Appendix 1: SampleCompany NameAllianceContinent1EgyptairStar AllianceAfrica2Ethiopian AirlinesStar AllianceAfrica3Kenya AirwaysSkyteamAfrica4Royal Air MarocTop 5 RegionAfrica5South African AirwaysStar AllianceAfrica6AeroflotSkyteamAsia Pacific7Air ChinaStar AllianceAsia Pacific8Air New ZealandStar AllianceAsia Pacific9All Nipon Airways GroupStar AllianceAsia Pacific10Asiana AirlinesStar AllianceAsia Pacific11Cathay PacificOneWorldAsia Pacific12China AirlinesSkyteamAsia Pacific13China Eastern AirlinesSkyteamAsia Pacific14China Southern AirlinesSkyteamAsia Pacific15Japan Airlines CorporationOneWorldAsia Pacific16Korean AirlinesSkyteamAsia Pacific17Malaysia AirlinesTop 5 RegionAsia Pacific18Nippon Cargo AirlinesTop 5 CargoAsia Pacific19QantasOneWorldAsia Pacific20S7 AirlinesOneWorldAsia Pacific21Singapore Airlines GroupStar AllianceAsia Pacific22Thai AirwaysStar AllianceAsia Pacific23Vietnam AirlinesSkyteamAsia Pacific24Virgin AustraliaTop 5 RegionAsia Pacific25Adria AirwaysStar AllianceEurope26AegeanStar AllianceEurope27Air BerlinOneWorldEurope28Air EuropaSkyteamEurope29Air France KLMSkyteamEurope30AlitaliaSkyteamEurope31AustrianStar AllianceEurope32Brussels AirlinesStar AllianceEurope33CargoLuxTop 5 CargoEurope34Croatia AirlinesStar AllianceEurope35Czech Airlines SkyteamEurope36EasyJetTop 5 Low Cost CarrierEurope37FinnairOneWorldEurope38International Airlines Group OneWorldEurope39LOT Polish AirlinesStar AllianceEurope40Lufthansa GroupStar AllianceEurope41RyanairTop 5 Low Cost CarrierEurope42SAS GroupStar AllianceEurope43TAP PortugalStar AllianceEurope44TAROMSkyteamEurope45Turkish AirlinesStar AllianceEurope46El Al IsrealTop 5 RegionMiddle East47EmiratesTop 5 RegionMiddle East48Ethihad AirwaysTop 5 RegionMiddle East49Iraqi AirwaysTop 5 RegionMiddle East50Qatar AirwaysAirline business top 25Middle East51Royal JordanianOneWorldMiddle East52Saudi Arabian AirlinesTop 5 RegionMiddle East53Delta Air LinesSkyteamNorth America54AeromexicoSkyteamNorth-America55Air CanadaStar AllianceNorth-America56AirTran AirwaysTop 5 Low Cost CarrierNorth-America57Alaska Air GroupTop 5 RegionNorth-America58American AirlinesOneWorldNorth-America59Atlas AirTop 5 CargoNorth-America60ExpressJetTop 5 RegionNorth-America61FedExTop 5 CargoNorth-America62FrontierTop 5 RegionNorth-America63JetBlue Airways CorporationTop 5 RegionNorth-America64SkyWestTop 5 RegionNorth-America65Southwest AirlinesTop 5 Low cost CarrierNorth-America66United AirlinesStar AllianceNorth-America67UPSTop 5 CargoNorth-America68US AirwaysStar AllianceNorth-America69Aerolíneas ArgentinasSkyteamLatin-America70AviancaTacaTop 5 RegionLatin-America71GOL Transportes AereosTop 5 RegionLatin-America72LAN AirlinesOneWorldLatin-America73TAM AirlinesStar AllianceLatin-AmericaAppendix 2: The ScorecardCompany name: ……………………………………………………………Type of Report: ………………………………………………………………………. Alliance: ……………………………………………………………………...Year: …………………….…………………………………………………………………… Country: ………………………………………………………………………GRI: …………….……………………………………………………………………………..Continent: …………………………………………………………………….Auditor : …………………………………………………………………………………...Part 1: Environmental Indicators and their ProvisionThemeIndicatorProvidedPointsConsumptionsRaw materialsFuel? Yes ? No 0 / 1EnergyWater Electricity Other energies? Yes ? No? Yes ? No? Yes ? No 0 / 1 0 / 1 0 / 1Emissions- Greenhouse gassesCO2 (or CO2/pkm)? Yes ? No 0 / 1NOx? Yes ? No 0 / 1SO2CH4? Yes ? No? Yes ? No 0 / 1 0 / 1- In-flight fuel jettisonOccurrences of fuel jettison (Number)? Yes ? No 0 / 1Fuel jettisoned (Tonnes)? Yes ? No 0 / 1Noise Noice impactGlobal noise energy indicator? Yes ? No0 / 1WasteQuantity of non-hazardous industrial waste? Yes ? No 0 / 1Quantity of hazardous industrial waste? Yes ? No 0 / 1Total ….. / (13)Part 2: CSR initiatives within the environment dimension and their adoptionThemeGoalInitiativesQuantificationPointsEmissions & Air pollutionReduce fuel consumption ? Yes ? No ? Yes ? No0 / 1 / 2Introduce new fuel efficient aircraft ? Yes ? No ? Yes ? No0 / 1 / 2Reduce total aircraft weight? Yes ? No ? Yes ? No0 / 1 / 2Optimize operational procedures and/or air traffic management? Yes ? No ? Yes ? No0 / 1 / 2Engine washing? Yes ? No ? Yes ? No0 / 1 / 2Install winglets ? Yes ? No ? Yes ? No0 / 1 / 2Conduct/support testing of alternative fuels? Yes ? No ? Yes ? No0 / 1 / 2Form partnerships with NGOs? Yes ? No ? Yes ? No0 / 1 / 2Use of simulators for flight training ? Yes ? No ? Yes ? No0 / 1 / 2Introduce environmentally friendly ground vehicles ? Yes ? No ? Yes ? No0 / 1 / 2Consult with local businesses on local (air) pollution? Yes ? No ? Yes ? No0 / 1 / 2Total ..... (/ 22)Waste & BiodiversityReduce use of paper? Yes ? No ? Yes ? No0 / 1 / 2Evaluate biodegradable materials ? Yes ? No ? Yes ? No0 / 1 / 2Reduce and/or recycle waste ? Yes ? No ? Yes ? No0 / 1 / 2Test alternative deicing? Yes ? No ? Yes ? No0 / 1 / 2Tree-planting initiative? Yes ? No ? Yes ? No0 / 1 / 2Economic usage and proper handling of chemical substances? Yes ? No ? Yes ? No0 / 1 / 2Total ..... (/ 12)Energy & WaterReduce energy use in offices/facilities? Yes ? No ? Yes ? No0 / 1 / 2Use green/renewable energy ? Yes ? No ? Yes ? No0 / 1 / 2Reduce water consumption? Yes ? No ? Yes ? No0 / 1 / 2Reduce and/or treat discharge from maintenance facilities? Yes ? No ? Yes ? No0 / 1 / 2Total ..... (/ 8)NoiseTest new operational procedures (continuous descent and so on) ? Yes ? No ? Yes ? No0 / 1 / 2Introduce quieter aircraft ? Yes ? No ? Yes ? No0 / 1 / 2Conform with ICAO Chapter 3 or Chapter 4 noise level? Yes ? No ? Yes ? No0 / 1 / 2Reduce night landings/takeoffs? Yes ? No ? Yes ? No0 / 1 / 2Total ..... (/ 8)OtherSponsor environmental organizations? Yes ? No0 / 1 Contribute to scientific research projects? Yes ? No0 / 1 Obtain ISO 14001 or forthcoming certification for EMS? Yes ? No0 / 1 Consideration of EU ETS ? Yes ? No0 / 1 Carbon-offsetting program? Yes ? No 0 / 1 Total ..... (/ 5)Total ……. (/68)Appendix 3: Scores per airlineCompany NameScore on GRI-indicatorsScore on IATA-initiativesTotal Report Quality Score 1Kenya Airways0112Egyptair0223Ethiopian Airlines0664South African Airways0335China Southern Airlines616226Asiana Airlines423277Cathay Pacific928378Korean Airlines930399Qantas391210Virgin Australia9142311Japan Airlines Corporation0151512China Airlines2171913Air New Zealand07714Nippon Cargo Airlines0131315Singapore Airlines Group0111116All Nipon Airways Group11435417Air China381118Aeroflot34719SAS Group12324420CargoLux4131721Air France KLM13425522Finnair10243423Aegean0111124Lufthansa Group 7293625Air Berlin191026Czech Airlines 23527Adria Airways191028EasyJet1111229Air Europa04430Alitalia03331TAROM08832Brussels Airlines0141433Croatia Airlines07734LOT Polish Airlines01135TAP Portugal05536Ryanair0131337International Airlines Group1181938Emirates12213339El Al Isreal08840Royal Jordanian07741Ethihad Airways01142Qatar Airways0131343Southwest Airlines9273644UPS11384945Delta Air Lines8233146JetBlue Airways Corporation2161847American Airlines4252948Air Canada3192249United Airlines6243050US Airways1242551FedEx4202452Alaska Air Group6283453Frontier08854Aeromexico0161655AviancaTaca213 ................
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