Partner Sydney
"Environmental, social and governance (ESG) issues and concerns play an increasingly direct and critical role in all aspects of the operations and business of airports."
| TERMS AND CONCEPTS | |
|---|---|
| A Access | Airports provide protesters and activists with a high-profile target for demonstrations, sit-ins and blockades, ranging from gluing themselves to active runways to blocking access roads, to cause maximum disruption to all aspects of an airport’s operations and business. While these are predominantly in support of environmental issues and causes, there has been a significant increase in politically motivated blockades and sit-ins with varying degrees of direct connection to the operations and business of an airport. Efforts to remove demonstrators are typically conducted in the glare of conventional and social media and can negate airport ESG initiatives and policies. Airport crisis management and contingency plans should be updated to respond to such events, including large demonstrations and smaller impromptu protests and sit-ins. |
| A Advertising | Claims and statements on sustainability and other ESG issues in advertising have quickly become a global and persistent focus of advertising regulators and standards organisations. Airports should assume and expect that advertising content which deals with sustainability and ESG will be critically and thoroughly assessed. If this content cannot be substantiated, airports should be prepared to pay fines and be forced to withdraw advertising in the glare of publicity. |
| B Bluewashing | Bluewashing refers to misleading or deceptive statements or representations about commitments to social and ethical practices. Emerging more recently than greenwashing, bluewashing is a potentially more powerful tool for activist shareholders and regulators. Bluewashing poses specific risks and challenges for airports, particularly in relation to diversity and equality. Airports which outsource services may come under greater scrutiny, particularly in relation labour practices and the use of foreign labour. |
| B Brand Defence | Airports are already a prominent and high-profile target for environmental campaigners and activists. Airports and their employees, management, Boards, representatives and shareholders must be prepared to be questioned about and challenged on the policies of the airlines and its commitment to sustainability and to ESG goals and objectives in all media. In addition to more conventional interactions, such as AGMs, press conferences, sponsored events and conventional media advertising, increasingly the focus is on social media channels, which pose their own challenges and opportunities. |
| C Curfew | Environmental activists have seized on curfews as a means of exerting pressure on airports and governments. Airports must be ready to defend curfew-free operations and to identify the commercial impact of the imposition of a curfew or other flight movement restrictions. A key focus of the debate on curfews will be the extent to which newer and quieter aircraft and their noise footprints can assist to moderate demands for curfews and other restrictions on flight operations. |
| D Directors | Directors, and the boards on which they serve, are attracting increasing attention from regulators and ESG campaigners. The role of directors and boards in analyzing and approving airport ESG and sustainability policies provides a separate and supplementary target for airline ESG critics. Criticism of board and director decisions and calls for their removal can indirectly force airports to deal with criticism of and challenges to their ESG policies. Investigations and litigation which require disclosure of Board minutes and records and depositions of directors can provide valuable and useful evidence and information for further investigations into and subsequent proceedings against an airport. Airport shareholders and their directors and boards should consider the extent to which Board records and documents could be disclosed to investigators, regulators and hostile counsel and the extent to which directors and boards require independent legal and expert advice on ESG issues which are considered and dealt with by boards and directors. |
| E Employees | Employees in passenger-facing roles are increasingly featured in social media posts about airports, particularly check-in, security and boarding/disembarcation staff. While this is currently focused on customer service issues, airports must be prepared not only for their employees to be questioned and challenged about airline ESG and sustainability policies and the personal views of employees on these policies but for these interactions to be rapidly and broadly shared across a range of social media channels. |
| G Green Financing | Public and private funding of airport expansion, renewal and construction is increasingly linked to ESG targets. This can include green bonds, which require funds to be used to improve energy efficiency, sustainability-linked loans to fund solar powered terminals and government loans which stipulate waste recycling targets and employee diversity. As governments and lenders increasingly integrate ESG targets and requirements into their funding, airports will need to demonstrate that they can meet these targets. These targets will become more critical and essential as airports compete with other infrastructure projects for green financing. |
| G Green Growth | Airports will increasingly need to demonstrate that they can balance growth and development with biodiversity and the environmental impact of this growth and development. This will involve assessing the environmental impact of growth and development against environmental goals and objectives such as carbon neutrality, carbon emissions, air quality and noise pollution. Airports will need to consider committing to independent and objective standards and safeguards. As the focus on airports and their impact becomes increasingly critical, this is likely to extent to monitoring and enforcement. These commitments may also become part of public service obligations. |
| G Greenhushing | In the face of greenwashing claims, investigations and litigation, many companies have reduced their statements and content on ESG and sustainability. While ‘greenhushing’ may appear to provide relief from the prospect of greenwashing claims, investigations and litigation, this is a short-term solution. As greenwashing claims and investigations become even more widespread and accepted, conscious and deliberate actions to conceal the position and actions of a company on ESG and sustainability may only serve to weaken the position of the company and its response. This also bring into question management and Board credibility. |
| G Greenwashing | Greenwashing claims and complaints were amongst the first manifestations of the rise of ESG. Not unique to the aviation sector, misleading or deceptive claims and statements about sustainability, environmental or climate credentials and environmentally friendly practices and business operations quickly achieved a prominent and vulnerable status as companies sought to communicate their ESG goals and objectives. Where these claims and statements cannot be substantiated, companies must be prepared to be investigated and pursued by government agencies, shareholders and consumers and in conventional and social media. Greenwashing litigation across the world has consistently shown that claims and statements about sustainable and environmentally friendly business operations, which cannot be substantiated, will result in fines, penalties, damages and negative publicity. |
| L Lieferkettensorgfaltspf- lichtengesetz | While the German Supply Chain Law of 2023 may not apply immediately and directly to airports outside Germany, its broader application and the introduction of similar laws in other jurisdictions are both likely and imminent. Airports must be prepared to demonstrate that their supply chains have been rigorously investigated and comply with their ESG goals and objectives and to deal with bluewashing claims. In time, airports should be prepared to show that there are tangible and demonstrable consequences for partners or suppliers who do not meet these ESG goals and objectives. This is particularly because the environmental and social risks, which can arise from and through these supply chains, can directly and tangibly affect airports and can be outside the control of airports. Where this also results in an airport being in breach of a law like the German Supply Chain Law, the consequences may be substantially more serious than negative publicity. |
| S Procurement (sustainable) | While the German Supply Chain Law of 2023 may not apply immediately and directly to airports outside Germany, its broader application and the introduction of similar laws in other jurisdictions are both likely and imminent. Airports must be prepared to demonstrate that their supply chains have been rigorously investigated and comply with their ESG goals and objectives and to deal with bluewashing claims. In time, airports should be prepared to show that there are tangible and demonstrable consequences for partners or suppliers who do not meet these ESG goals and objectives. This is particularly because the environmental and social risks, which can arise from and through these supply chains, can directly and tangibly affect airports and can be outside the control of airports. Where this also results in an airport being in breach of a law like the German Supply Chain Law, the consequences may be substantially more serious than negative publicity. |
| S Social Media | Social media channels have become one of the most critical fora in which airport ESG claims are analysed, questioned and challenged. Airports make increasingly widespread use of social media channels to promote their brands and interact with existing and potential customers. The provides ESG campaigners with a range of opportunities to comment on, question and dispute statements about and polices on ESG. This interaction is informal and in real time, does not require factual substantiation and individuals can interact anonymously. With a broad range of channels and interactions across an equally broad range of time zones, airports must increasingly devote resources to 24 hour monitoring of their social media channels to respond to comments. As the use of AI and ‘deepfakes’ increases, airports must be prepared to respond rapidly and effectively to faked and ‘fake news’ before unsubstantiated, incorrect or false social media content attracts the attention of conventional media. The longer it takes an airport to respond to such posts, the greater the prospect that ‘fake news’ will be accepted as news. The need for rapid and effective responses is magnified for social accounts which are not operated or controlled by airports. Airport social media teams must be prepared to deal with channel or platform operators who are reluctant or unwilling to remove content at the request of an airport. This is particularly where such content is trending on the platform and has high levels of interaction with other users of the platform. This will require an airport to interact with the content and to seek to address and respond to the content to neutralise, and ideally minimise, its impact. |
| S Sponsorship | Sustainability affects all aspects of the operations and business of an airport. The more prominent manifestations of this are sustainable aviation fuel (SAF) and recycling. SAF is currently seen as one means for the aviation sector to show its commitment to sustainability. In committing resources to SAF infrastructure, airports should consider the extent to which SAF supply can meet demand. The limited supply of SAF and the time to commission new refineries creates significant risks for airlines, particularly in the context of greenwashing claims and litigation. Airports should also be prepared to demonstrate that expansion and redevelopment is based on reusing and recycling existing building materials and facilities, enhanced waste to energy systems and more energy efficient architecture. |
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