Investing in the future

With a significant emphasis on reducing carbon emissions and social as well as community welfare, the outlook towards Corporate Social Responsibility is changing.

Lionel Alva

Milton Friedman, the late economist alluded that a corporation must be limited to pursuing its shareholders economic interests. However, today, with changing business dynamics and increasing globalisation, companies have a variety of stakeholders — employees, suppliers, customers and also the community.

This also holds true in the case of the air cargo industry, a vital industry that has an impact on billions worldwide through its extensive supply chain. While the industry creates welfare, opportunities and jobs world-over, it also has a discernible impact on the community and environment.

Being that airlines focus greatly on their service aspects and act responsibly towards the community and environment, there is also a need for Corporate Social Responsibility (CSR) reporting to highlight their efforts. Doing so would not only garner positive public interest in their company but it would also lead to CSR competition in the industry that would consequently lead to organisations setting standards for themselves in terms of sustainability.

There are various schools of thought when it comes to CSR, under the ambit of which community driven initiatives, social welfare initiatives as well as environmental protection ideas come under. In a nutshell, CSR postulates that an organisation is inter-dependent on society for its long term growth and survival thereby placing an emphasis on acting responsibly towards society and the environment.

Many airlines incorporate policies wholly dedicated for the purpose of CSR. Being part of a community they harbour a certain degree of social responsibility and implement practices that are environmentally sustainable as well as socially beneficial. These polices have led to a decline in emissions since the turn of the century.

Milla Nyholm, manager, marketing and sustainability for Finnair Cargo, highlights that since 1999, per-seat emissions have been reduced by one quarter. “A further 20 percent reduction measured in revenue tonne kilometres is targeted by 2017 in pursuit of the long-term goal of carbon-neutral growth by 2020. The most recent and significant step towards this goal is the introduction of the new A350 XWB aircraft, which brings a significant increase in cargo capacity and substantially raises the bar for both environmental performance and operational efficiency, thanks to its superb payload/range capability and usage of lighter materials across the aircraft,” Nyholm says.

By and large, airlines and airports act in a responsible fashion in terms of CSR. Acting responsibly is the middle name of most airlines, which are used to stringent safety regulations and caring for customers. However, there is a need to understand how CSR initiatives provide measurable long term benefits to the organisation.

To cite an example, Amsterdam Airport Schipol devotes considerable attention to the efficient design of facilities and smooth traffic circulation at the airport. The airport has also undertaken several initiatives towards reducing CO2 emissions and promoting the use of sustainable energy. Amsterdam Airpport Schipol intends to meet 20 percent of its energy requirements by 2020 through sustainable means.

Similarly, airlines too are adopting an intricately planned approach towards achieving sustainability goals.

“We are adopting a structured approach to measuring sustainability performance, drawing from best practice initiatives such as the global reporting initiative, ISO standards, IATA IOSA and IENVA schemes and the Greenhouse Gas Protocol,” says Ulrich Ogiermann, chief cargo officer, Qatar Airways.

However, the business case for CSR delineates that it is not wholly relegated to the confines of philanthropic pursuits and CSR initiatives can be effectively molded to be beneficial for the organisation. Many organisations have changed their outlook towards corporate social responsibility and now perceive it as an investment.

In this regard, Lufthansa Cargo’s employees started Cargo Human Care (CHC), a humanitarian and medical aid project in collaboration with doctors from Germany. The group has initiated a number of projects in the rural area around Nairobi and Marsabit in Kenya.The Cargo Human Care Medical Centre, attached to the Mothers’ Mercy Home orphanage, looks after the orphans and underprivileged people in the surrounding area. In the Nest project, a home for children whose mothers are in prison, CHC paediatricians provide medical care. Two villages comprising 224 families in the drought area around Marsabit are provided with foodstuffs by CHC since 2011.

“We are convinced that only a sustainable way of steering our company will secure our long term success. After safety, it’s future viability that has the highest priority for us. For many years, Lufthansa has provided swift and uncomplicated help in the event of catastrophes – as a rule in close consultation with the German government and noted German aid organisations. For example, we have recently flown 15,000 camp beds from the US to Germany. The beds were desperately needed by refugees who are being looked after by the German Red Cross in emergency accommodation,” says Andreas Pauker, spokesperson for Lufthansa Cargo.

It has also been well established that CSR is a viable business choice as it is a tool that can bring about cost and risk reductions; allow organisations to foster corporate reputation and provide them a legitimacy that would lead to synergistic value creation in the long term.

Ogiermann adds, “As an organisation we take our responsible business practices very seriously. We have strategies and policies in place to manage and continually improve our impact on the environment, the communities in which we operate and on society as a whole.”

Many organisations also emphasise heavily on certain aspects of CSR. And widely accepted approaches substantiating the business case include focusing on the empirical research linking CSR with corporate social performance and identifying values brought to different stakeholder groups that directly or indirectly benefit the company’s bottom lines.

CSR gives an organisation a more holistic approach towards its business by enabling it to create brand value and forge deeper ties with its clientele.

“LATAM Airlines Group aims to be one of the best airlines in the world by enriching its relationships with customers, employees, communities, governments and suppliers, and by building positive relations that impact both the company and society. To achieve this, the company integrates sustainability into products and services that improve customer experience and seeks to contribute to Latin America’s economic development and cultural heritage through different initiatives that stem from each of our CSR programmes,“ avers Andrea Campos Valdés, Corporate Affairs and CSR at LAN Cargo.

Ergo, cost and risk reduction may also be achieved through CSR activities directed at the natural environment. Specifically, data shows that being proactive on environmental issues can lower the costs of complying with present and future environmental regulations while enhancing firm efficiencies and drive down operating costs.

“One of our largest investments last year — the acquisition of more than 100 new planes — was a quadruple win, for our employees, customers, shareholders and the environment. With new high-tech capabilities and improved design of these aircraft, we were enabled to provide new comforts and amenities for customers, whilst making our fleet more fuel efficient. Employees are engaged in reducing fuel use and lowering greenhouse gas emissions via our Fuel Smart programme, flight attendants are recycling cans and other materials on board aircraft, and we are integrating high standards of environmental performance,” asserts Jessica Tyler, senior manager of Planning and Execution, American Airlines Cargo.

Here, it must be kept in mind that CSR has both direct and an indirect impact on an organisation in the air cargo sector. Thus there is a compelling need to bring CSR initiatives to the fore by reporting them and thereby creating a measurable index of CSR initiatives. Consequently, this would set up a benchmark for CSR performance making CSR initiatives more engaging than what they were before. This would also help foster an approach where CSR is sought after and looked upon as an investment into society.