International Airlines Group

IAG’s climate risk scenario analysis is comprehensive and aligned with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). In 2021, the group used the 3°C, 1.5°C orderly and 1.5°C disorderly scenarios to explore physical, market, technology and policy impacts on its operations. IAG identified key potential impacts and major uncertainties that might affect its business. The group intends to make the TCFD-aligned scenario analysis a rolling exercise from 2022 onwards and use it to continuously inform the group’s sustainability planning. Nevertheless, the group can disclose more detailed results of its scenario analysis translated into value at risk or other financial terms.

In 2021, IAG extended its net-zero commitment to its supply chain, carrying out a detailed analysis of its suppliers with a focus on delivering on its scope 3 commitments. In 2022, the group is planning to embed sustainability key performance indicators (KPIs) into its procurement process, though it is unclear which KPIs will be included. IAG also collaborates with its suppliers on R&D in low-carbon vehicles . For example, in September 2020, ZeroAvia completed the world’s first hydrogen-electric fuel cell powered flight of a commercial-grade aircraft. In 2021, IAG invested in ZeroAvia to accelerate the development of a 50+ seater aircraft capable of running on zero-emissions hydrogen-electric power.

IAG’s target to reach net-zero emissions by 2050 without using offsets is one of the strongest targets among the aviation companies assessed. The target is supported by a short-term target to reduce scope 1 emissions intensity by 11% by 2025, also without using offsets. However, the group’s 2030 target includes an unknown quantity of offsets, which can undermine the timely action required to successfully achieve its net-zero target . IAG should set intermediate targets at regularly spaced intervals of no more than five years. This can improve accountability and incentivise near-term action on its longer-term net-zero goal.

Before 2020, IAG had been decreasing its emissions intensity at an average annual rate of approximately 1%. However, its cumulative emissions between 2016 and 2021 still exceeded its carbon budget by 35%. To align with its 1.5°C pathway, IAG is required to reduce its emissions intensity by at least 4% per year. The group has announced investments in 142 new aircraft over the next five years, which should improve its emissions intensity in the near term. However, the group needs to acknowledge that acquiring new aircraft is not a long-term solution and should develop a plan to purchase low-carbon aircraft in the future.

IAG remains on the board of the International Air Transport Association (IATA) and is a member of Airlines for Europe (A4E), both of which are reported to have opposed climate policies. IATA has actively opposed numerous measures to decarbonise aviation, including the full inclusion of aviation in the EU Emissions Trading System, kerosene fuel taxes and ticket taxes on flights. IAG does not support the imposition of the jet fuel tax, arguing that it will reduce the sector’s ability to invest in more effective measures. The company can improve its credibility by publishing its own clear stance on climate policies and a process to withdraw from trade associations that oppose climate policies.

IAG aims to achieve net-zero emissions by 2050 for all its operations without using offsets. The group intends to use carbon removals for any residual emissions it will have in 2050. The group’s interim targets include emissions intensity reduction by 11% by 2025 compared to 2019 and scope 1 and 2 emissions reduction by 20% by 2030 compared to 2019.

IAG intends to achieve its net-zero goal by using new aircraft and improved operations (accounting for 50% of the overall reduction); SAF (for 30% of the reduction) and carbon removals (for 20% of the reduction). The group is also investing in new hydrogen fuel cell solutions. Furthermore, the group’s low-carbon transition plan is supported by several financial commitments.

To meet its 2025 target, IAG is going to invest in 142 new aircraft over the next five years. The group continues to invest in the development of SAF and in R&D projects focused on carbon removals. The Altalto project, which the group has invested in, is expected to deliver SAF from non-recyclable household waste within five years.

Before 2020, IAG had been decreasing its emissions intensity at an average annual rate of about 1%. During 2020 and 2021, IAG’s emissions intensity increased significantly due to the impact of the COVID-19 pandemic. IAG’s cumulative emissions between 2016 and 2021 exceeded its carbon budget by 35%.

IAG’s emissions reduction rate between 2016 and 2021 was not aligned with its 1.5°C pathway. No evidence could be found that the group’s currently planned measures will allow it to achieve an 11% emissions reduction by 2025. The group needs to strengthen its action plan considerably and increase its 2030 ambitions.

The company publicly discloses a commitment to engaging in social dialogue with workers and unions. However, no relevant disclosure was found regarding the categories of stakeholders it engages with on a just transition. Nor was there any evidence to show the company’s ongoing social dialogue and meaningful engagement with affected stakeholders.

No evidence was found of the company undertaking low-carbon transition planning to mitigate the social impacts of the transition on workers, affected stakeholders and its business relationships. Additionally, no evidence was found to demonstrate the company’s engagement in social dialogue or engagement with stakeholders in its just transition planning.

No public commitment by the company was found stating its intention to create and support access to green and decent jobs as part of the low-carbon transition. Moreover, no evidence was found of the company’s action to promote these jobs in a way that ensures gender balance and inclusion of vulnerable groups. Additionally, no relevant disclosure was found of the company’s assessment of employment dislocation risks.

No public commitment by the company was found stating its intention to reskill and upskill workers displaced by the transition to a low-carbon economy. Additionally, no evidence was found that the company reskills and upskills workers in a way that ensures gender balance and inclusion of vulnerable groups.

No relevant disclosure was found to show if the company identifies impacts of the low-carbon transition on social protection for workers and affected stakeholders, nor how it contributes to social protection. Additionally, no evidence was found that the company expects its business relationships to contribute to the social protection of their workers and affected stakeholders.

No relevant disclosure was found to show how the company identifies any misalignment of its lobbying activities with policies and regulations that support the just transition, nor of the measures it takes to address misalignment. Furthermore, no evidence was found that the company lobbies for policies and regulations for green and decent job creation; retention, education and reskilling; and social protection for workers.

The company commits to respecting human rights. However, the company’s Code of Conduct does not state a c ommitment to respect all of the ILO fundamental rights at work. Furthermore, the company can strengthen disclosure on its human rights due diligence process and engagement with affected stakeholders. The company does, however, have a grievance mechanism available to workers and external stakeholders that allows them to raise human rights concerns.

The company commits to respecting the health and safety of its workers and expects the same commitment from its business relationships. The company also has a target of 40% female representation in senior roles by 2025. However, no evidence was found of a broader-level company commitment to gender equality and women’s empowerment. The company discloses that 42% of its board members are female and it discloses the gender of its workforce by employee category. However, it can increase disclosure on additional indicators of workforce diversity. Moreover, even though the company discloses the proportion of its direct workforce covered by collective bargaining agreements, it can increase disclosure on this subject, as well as on its living wage and working hours practices.

The company discloses its global tax strategy and mentions board-level responsibility for compliance with the strategy. Additionally, the company has a policy prohibiting bribery and corruption, and it includes corresponding clauses in its contracts with business relationships. However, the company can increase disclosure regarding its policies for lobbying and political engagement and for the protection of employees’ and customers’ personal data.