The possibilities of implementing sustainability reporting (ESG) by Polish Airport

Resumo

Objectives | The purpose of this paper is to present the impact of environmental, social and corporate governance criteria (implemented at EU level as ESG reporting) on airport operations. These criteria will form the basis of sustainability (otherwise known as ESG) reporting, which will complement traditional financial reporting. For 2024, companies so far covered by the NFRD (Non-Financial Reporting Directive) will report. However, in subsequent years, more entities will be required to comply ESG rules, including airports that meet 2 of the 3 adopted by EU criteria (turnover, balance sheet and employment). In addition, the Coorporate Sustainability Reporting Directive includes regulations on the supply chain responsibilities of reporting organisations. Polish airports, as an international supply chain operator, are aware of the criteria for ESG implementation, but the application process is differentiated. In addition, their role in the region is bases on their economic potential and the impact on the region’s economic activity, which consequently affects the number of collaborators worldwide. Therefore, there is a need to investigate the degree of awareness and implementation of ESG concepts at Polish airports.

Methodology | Due to the formation of formal regulations and reporting requirements, which will be included within the implementation document of the European Sustainability Reporting Standards (ESRS), an analysis of foundational data was adopted as the main method. Primarily legal acts and statistical date were used, as well as information personal interviews from managers at Polish airports. The choice of Polish airports in not accidental. Polish air traffic contributed over 5% of traffic for the European Union in 2021. In addition, the perspectives for the development of air traffic for Poland until 2040, assuming a systematic increase in the number of passengers carried in Poland, the involvement of air carriers, long-term development plans for regional airports and building of CPK (Central Hubs for Poland), make the selection of the subject for study appropriate. Fifteen airports were analysed, considering their air traffic and ownership structure. Based on the analysis of the collected data, Authors were presented recommendations for the correct implementation of the ESG.

Main Results and Contributions | The European Commission, over the past years, has progressively introduced more regulations related to the Green Deal.  One of the most recent documents is the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards establishing European standards for environmental, social and corporate governance (ESG) reporting. The purpose of this extended abstract is to discuss the regulations contained in the recently adopted CSRD, which came into force in January 2023, and how it may affect airports. 

ESG as a concept is relatively new. However, it is possible to find ideas that are older and similar in scope (for example TBL - the triple bottom line introduced in 1994 by J. Elkington and referring to an accounting framework with three dimensions: social, environmental and economic). Nevertheless ESG (E - environmental, S - social, G - corporate governance) assessments of companies are becoming a key element in the global drive to ensure sustainability. The reporting principles - the scope of which is defined by the letters of the acronym ESG - are set out in the ESRS standards.

In the first instance (from 2024), large companies affected by the NFRD will report. In the second instance (from 2025), companies 2 of the 3 criteria: employing more than 250 people, with annual revenues of more than EUR 40 million or a balance sheet total of more than EUR 20 million. Then, for 2026, entities employing more than 10 people and listed on the stock exchange will report.

The directive itself will also apply to companies in supply chains. As such, airports will need to consider ESG criteria, even if they themselves do not directly comply with non-financial reporting, as airlines - such as Ryanair and Wizz Air already report voluntarily. Also, the IATA document, Fly net zero, points to the need for energy savings at the airport, such as restrictions on the use of auxiliary propulsion units, single-engine taxi times. According to IATA, Sustainable Aviation Fuel (SAF) is expected to constitute 65% of the total fuel demand by 2050. The European Union has set a target of 63% SAF fuel utilization by 2050, and carriers have expressed their commitment to increasing the use of SAF. An illustration of this commitment is KLM, an airline that allows passengers to purchase additional SAF fuel to reduce the CO₂ emissions associated with their flights. This further emphasizes that carriers will have specific expectations from airports.

In the research, it can be inferred that Polish Airports is in the value chain of entities that are obliged to report ESG and thus, will to some extent have to share information on environmental impact, social and corporate governance factors.

The global aviation industry accounts for 2% of the world's total carbon dioxide emissions. In the context of the airport, ESRSs related to pollution (including greenhouse gas emissions) and affected communities may be of particular relevance, as some nuisance from the presence of the airport - from excessive traffic to increased noise - arises for residents in the surrounding area. In accordance with the IATA document, (energy) resource management is of significance, as indicated in ESRS E5 on Resource Use and Circular Economy. Ongoing efforts are being made to adopt the new international standard ISO 53001, designed to assess the attainment of sustainability goals. Consequently, it serves as a response and tool for the CSRD.

In summary, airports are one of those places that, even if they will not be required to report non-financially under the Directive, the external considerations will have an influence on  the need to obtain non-financial data and take actions in the ESG area.

The Authors see a need for future research in this area. Firstly, there is still  a lack of scientific papers on ESG issues in air transport, and thus, our study fills a scientific gap. Furthermore, it is a second aspect, our research is helpful for decision makers creating regional air transport policy and airport managers.

Limitations | The analysis of foundational data is extremely important in the case of sustainability reporting, as the subject matter is new and a theoretical foundation needs to be created for it. However, it should be noted that material dedicated to airports does not exist at the moment. In addition, it is worthwhile to start conducting research and interviews in the given field, as they can be a valuable source of information exchange and support airports in developing a sustainable approach to business.

Conclusions The implementation of sustainability in air transport, including airports, is covered in various studies and guidelines, making it difficult to implement sustainable solutions. Some airports, meeting the criteria of the CSRD, will be obliged to report under the regulations. Others, in all likelihood, will be asked about ESG criteria by their contractors as an important part of the value chain. Because of this, sorting out the sustainability of airports in a formal and legal context is important. ESG reporting will significantly influence the evaluation of contractor selection. Key contractors, such as carriers, will choose airports based on the outcomes of balanced reporting. Consequently, it is crucial to develop an ESG strategy and reporting, even if not currently mandated, to enhance competitiveness.

References

Elkington, J. (1998) Cannibals with Forks: The Triple Bottom Line of the 21st Century. Stoney Creek: New Society Publishers.

European Commission (2023) Corporate sustainability reporting. European Commission. Available at: https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting.en (Access 19.12.2023).

Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups. Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32014L0095(Access 20.06.2023).

European Parliament and European Council (2022). Directive (EU) 2022/2464 of the Parliament and of the Council. Official Journal of the European Union. Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32022L2464 (Access 20.06.2023).

IATA (2021) Fly net zero. Available at: https://www.iata.org/en/programs/environment/fl ynetzero/ (Access 20.06.2023).

Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive 2013/34/EU of the European Parliament and of the Council as regards sustainability reporting standards. Available at: https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX:32023R2772 (Access 22.01.2024)

IATA Report “Sustainable Aviation Fuel”; Available at: https://www.iata.org/en/iata-repository/pressroom/presentations/saf-gmd2023/ (Access 24.01.2024)

ISO 53001 - Management Systems for UN Sustainable development goals – RequirementsAvailable:https://www.iso.org/standard/86672.html (Access 24.01.2024)