As the Environmental, Social and Governance (ESG) reporting obligations for aviation industry players relating to carbon emissions become more stringent and onerous, a variety of providers are stepping forward with software solutions that they say will independently and accurately help, discovers Mark Pilling. Suppliers such as Fexco/Avocet, IBA and the Aviation Working Group are all fielding products they claim can address this requirement. The increased obligation for ESG reporting is becoming a live issue for the air finance community with banks, lessors and insurance companies all required to provide detailed reporting on their aircraft assets on a regular basis, often annually. To assist, Irish financial and business solutions provider Fexco and Avocet Risk Management, an aviation risk management firm, have partnered to launch the Platform for Analysing Carbon Emissions (PACE), which they believe will set a new benchmark for analysing actual and predicted CO2 emissions.
“PACE is the first data and analytical solution for the aviation sector that delivers sustainability-linked analysis and translates the carbon footprint for all stakeholders into financial and climate risk,” said John Nozell, Chairman and Director of Avocet. “All businesses have a societal, legal and collective responsibility to measure, manage and disclose the climate-related risks derived from the asset portfolios in which they invest. PACE takes multiple inputs and leverages AI technology to automatically measure the carbon for all stakeholders and support sustainability-linked financing opportunities for the businesses that use their aircraft the most efficiently.”
The system, which has been under development for 18 months and is being trialled by some major lessors and banks, will provide accurate carbon emissions analysis for investors, financiers and aircraft owners to measure and forecast emissions from their assets and provide TCFD (Task Force on Climate Related Financial Disclosures) “reporting as a service”.
PACE aims to provide users with an insightful view of their portfolio and the ability to fully control, accurately measure and incentivise emissions reductions, say the partners, while also forecasting future carbon performance and proactively alerting the asset stakeholder to any exception events in real time. “This ensures all stakeholders have full transparency of their aircraft assets, their current, historic and future carbon output, as well as the carbon reduction trajectory against science-based targets, that will enable them to take the necessary remedial action to remain within carbon reduction KPIs and performance trajectories,” they added.
In March, aviation data and advisory company IBA, launched its InsightIQ Carbon Emissions Calculator, a carbon modelling tool that enables users to calculate and compare the emissions of airlines and lessors, entire aircraft fleets and regions over different periods of time, in addition to supporting analysis of specific commercial aircraft models and routes. Users can also map emissions geographically and gauge the potential impact of adding varying percentages of different types of sustainable aviation fuel.
Also in March, the Aviation Working Group launched the AWG Carbon Calculator, developed, it says, to generate accurate, reliable, and consistent carbon dioxide emissions data for aircraft and aircraft portfolios, with the data presented visually through various tabular and graphical outputs. AWG is a not-for-profit entity comprised of major aviation manufacturers, leasing companies and financial institutions that contribute to the development of policies, laws and regulations that facilitate advanced international aviation financing and leasing. Members include Airbus, Boeing, AerCap and Avolon.
Robert Neale, Chief Product Officer of PACE says the product automatically compiles actual flight data and applies a blend of aircraft data and industry standard methods to provide “consistent, comparable and reliable” information for aircraft portfolio modelling, investor relations and regulatory reporting requirements. The firm said it is the first platform to combine these capabilities with historic and predictive analysis, emissions target forecasting and real time exception event notifications, including emissions trading scheme credit risk exposures and sanctioned territory infringement alerts. It aims to provide up-to-date reporting on allowances, units surrendered and fleet lien exposures for schemes including EU ETS, UK ETS, Swiss ETS and CORSIA.
Another potential use of the PACE system is to enable financiers to independently report on the carbon emissions of their aircraft to obtain cheaper finance terms to incentivise the use of fuel-efficient types, said Neale. In a statement, Fexco said: “New sustainability linked finance/leasing products and transition linked finance/leasing products are starting to emerge in European markets, with global adoption likely.” There has been a handful of aircraft finance deals that have featured such terms but the data capture element to prove carbon emissions has been manual. A product like PACE will automate this process, said Neale.
PACE user dashboard:
Top photo: Rolls-Royce