Delta gives an upbeat account but soars past the most pressing issue facing the airline industry

If anyone’s in doubt about the US’s economic recovery, spend a few minutes with Delta Air Lines’ 2012 corporate responsibility report. You’ll get the impression that the world’s largest economy isn’t limping out of recession, it’s powering out at full throttle.

A 92-page PDF, Delta’s latest offering has everything you’d expect to see in a good CR report from a global airline: comprehensive sections on the environment, ethical business, community, customers (including the particularly topical issue of safety) and people. But Delta keeps going, dedicating considerable space to discuss the $3bn it is investing in “airport facilities and global products, services and technology” over the next several years.

Indeed, including business strategy information in the CR report is a step towards integrated reporting even though the opportunity was missed to link the investments to Delta’s CR strategy.

Delta’s chief executive, Richard Anderson, helped rebuild Delta after its 2005 bankruptcy through a shrewd merger with Northwest Airlines, a focus on profitable international routes, and aggressive cost cutting. It’s little wonder that he focuses on Delta’s financial success in his fairly impersonal welcome letter (a tone that’s carried through the report).

On top of the infrastructure investments, Anderson proudly states that the company is in its third consecutive year in the black, delivering $372m in profits, shared with investors, and $91m in operations bonuses to employees.

Pride at the top

He has every right to be proud, but when he tries to relate that performance back to CR, claiming that “our financial success underwrites Delta’s social responsibility”, he falls short. Anderson cites charitable contributions and building a great workplace as examples of Delta’s CR work and ignores the most pressing issue, climate change (the Intergovernmental Panel on Climate Change estimates that aviation is responsible for 3.5% of manmade climate change). 

And that’s a shame, because Delta’s performance in this area needs explanation. The company says emissions from its fleet of nearly 1,300 aircraft account for 98% of its carbon footprint, and reports absolute greenhouse gas (GHG) emissions reductions (scope 1, 2 and 3) of 18% since 2005.

But it is not clear how the reduction has been achieved. Has the number of flights reduced or have big fuel efficiency gains been made? The report does not answer this question clearly.

Delta, together with other major airlines, “supports” the International Air Transport Association’s industry goals, including a 1.5% annual fuel efficiency improvement by 2020 and a 50% reduction in CO2 emissions by 2050, relative to 2005. However, Delta’s own GHG emissions goal, introduced in the 2011 report, only provides short-term accountability. The goal is to reduce greenhouse gas emissions below the previous year’s level. If continued, this would ensure zero growth in impact, but the company does not map a course to achieve the industry commitment. 

Delta says that almost two dozen fuel-saving initiatives are partly to thank for the reductions. The most effective of these include flight planning, the installation of winglets on aircraft to reduce drag, and operational improvements that have cut aircraft taxi times. Delta publishes exactly how much fuel and GHG emissions were saved last year by each initiative. In 2012, there was a reduction of 189,154 tonnes of emissions through GHG reduction initiatives. This is commendable, but it’s a drop in the bucket compared to the almost 50m tonnes emitted in 2005; a drop in the bucket nowhere close to 18%.

Fuel understandably gets a lot of coverage in this report. In another show of financial strength, Delta explains how in 2012 it bought its own oil refinery to help secure its fuel supply, delivering cost savings of $300m a year. As yet there is no reporting of oil refining issues.

Delta says it is monitoring developments in biofuels and looking for partnership opportunities “with the ultimate goal of making a meaningful contribution to the industry’s goal of commercialising aviation bio-jet fuel”.

For all the attention that Delta gives its operational footprint, its supply chain is barely mentioned, although the four paragraphs that are included imply that more is on the way, particularly with regard to human rights. This is an area in which Delta has a good story to tell. It has a comprehensive effort to eliminate human trafficking, which requires employees to act if they are suspicious of violators. Delta says a supplier code of conduct is on its way “to enforce Delta’s position on human rights”.

With Delta in such a confident mood, it is a good opportunity for the airline to demonstrate stronger leadership in dealing with the industry’s most material sustainability issue: climate change.

Arthur Sprogis is a consultant at Context America.

Snapshot

Follows GRI? Yes

Assured? Greenhouse gas emissions through the Climate Registry.

Materiality analysis? No

Goals? Subscribes to industry-wide environmental goals.

Targets? Yes

Stakeholder input? Yes

Seeks feedback? Yes, and even provides a personal email address.

Key strengths? Strong reporting of the approach and success of fuel efficiency initiatives; strong GHG reduction performance .

Chief weakness? Chief executive's letter does not address the most important responsibility issues and performance.

Pleasant surprise? A clear focus on eliminating human trafficking, a human rights issue closely related to its business. 

airline  Arthur Sprogis  climate change  CR Reporting  Delta CR report  sustainability report 

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