Sustainability and air cargo
By Nick Blake
Sustainability is a topic that has the potential for difficult conversations in some business environments — something that I also experience in some discussion sessions with students in my classes at Business School Lausanne.
The difficulty is often finding the right choice of words, reasoning, research or other evidence that resonates with the audience and means enough to them personally or from a business perspective to become a compelling reason for change.
My business operating environment in the road and air transportation industries can at times be fairly hostile to measures put in place for reasons of sustainability, but which some may see as an attack on the viability of those industries.
Avoiding triggering a connection between the word sustainability and ‘green’ in discussions with these industries is in my experience the best way to ensure that the conversation can continue onto the ‘proper’ meaning of sustainability as a real business issue — ensuring long-term sustainable profitable business taking into account all the impacts that business has in a global sense.
A few months ago I was asked to speak to an audience of air cargo managers at the IATA World Cargo Symposium about the European Union Emissions Trading Scheme (ETS) and how it could be considered as a ‘wake-up call’ to the industry on sustainability.
IATA has been critical of the ETS — the potential negative effect in terms of additional cost for an industry that operates at extremely low levels of profitability is often cited.
Rather than revert to the scientific evidence of the damage being caused by CO2 emissions or getting into a dispute about the degree to which air transport contributes to total emissions, I instead decided to focus on the role of the customer in the sustainability debate.
A number of studies are now indicating that customers in certain markets are increasingly taking sustainability into account during the decision making process for the purchase of a variety of products and services. They may favour services, products or brands seen as being more sustainable, possibly paying a price premium in certain cases. They may also ‘punish’ services, products or brands that they consider unsustainable by demanding reductions in price, not purchasing, actively boycotting or even taking protest action.
My message to the IATA Cargo audience was that they could possibly better view the EU ETS scheme as being somewhat customer focussed, in that the scheme was approved by politicians who depend on public opinion for their continued power.
With more direct customer behaviour in mind the risk is clearly there that if the purchasing public perceive certain products as being less sustainable because of their transport by air then at a certain point that must have an influence on the companies selling those products in their choice of mode of transport.
Interestingly for the airline industry reducing CO2 output also has the potential to reduce their operating costs as fuel is now often their highest cost item. Reducing fuel burn through efficiency measures or by replacing older less fuel-efficient aircraft with newer efficient models has the potential to make a significant impact on cost for many airlines.
Replacing aircraft is in no way an easy option, particularly for the many airlines that are in financial difficulties and in a business climate where access to capital can be limited. But in many other industries switching to a more sustainable path also requires significant investment and can be difficult. The ‘do nothing’ alternative though is ultimately financially unsustainable, particularly where customer sentiment is already indicating a change in buying behaviour.
I’m pleased to report that my audience were not at all hostile to the arguments I presented them with — indeed certain organisations have already taken the initiative to make change and some are already enjoying increased profitability from doing so. For the others the journey remains a long and daunting one, but necessary for their long-term survival.
The conversation continues…