WHEREAS: The Intergovernmental Panel on Climate Change has advised that greenhouse gas (GHG) emissions must be halved by 2030 and reach net zero by 2050 in order to limit global warming to 1.5 degrees Celsius. Every incremental increase in temperature above 1.5 degrees will entail increasingly severe physical, transition, and systemic risks for companies and investors.
In its 10-K, Air Transport Services Group (“Air Transport” or “the Company”) says that it “may be negatively affected by global climate change or by legal, regulatory or market responses to such climate change.” However, Air Transport’s climate risk mitigation strategy falls short of investor expectations. The Company does not comprehensively disclose its Scope 1, 2, and 3 emissions – a baseline expectation conducted by many companies worldwide to identify climate risks. While the Company indicates that two of its airlines are committed to net zero by 2050 due to their membership in the International Air Transport Association, the Company itself has not set any interim targets demonstrating its path to net zero.
By contrast, almost 7,000 companies have set, or committed to set, science-based emissions reduction targets through the Science Based Targets initiative (SBTi). This includes many major airlines and Air Transport’s customer DHL, who has already set a near-term target with SBTi and is committed to net zero. Amazon, another large customer, has committed to net zero by 2040 – 10 years earlier than the Paris Agreement.
Setting targets may help the Company prepare for future regulations, such as proposed updates to the Federal Acquisition Regulation that would require major government contractors to set science-based emissions reduction targets. The U.S. Department of Defense comprised 30% of Air Transport’s consolidated revenues for 2022. The Company may also increase its competitiveness by becoming a sustainable solution for customers who are decarbonizing their supply chains.
Investors believe the Company should adopt science-based targets for its full carbon footprint and publish a climate transition plan – detailing the forward-looking, near-term, and quantitative actions the Company will take to achieve its medium- and long-term sustainability goals.