At this year’s MRO Americas, we spoke with John Colas, Partner and Vice Chairman, Financial Services Americas, on aviation’s path toward a greener future and his observations from the aviation community in Dallas.
What are the current and upcoming environmental regulations for companies and how are they evolving?
The new proposed regulation from the SEC has the most far-reaching implications for the U.S. economy because it specifically addresses the disclosure of climate risks. Public registrants will be required to disclose their climate risks including their Scope 1 and Scope 2 emissions. And if material- their Scope 3 emissions. The implications of the proposed rule are profound. Not only in terms of the work it implies for corporations to comply with, but more importantly- for the benefits that it will provide investors. There will be greater transparency and understanding of the climate risks associated with corporations.
How can corporations and businesses prepare to transition to net-zero for the short-term and long-term?
The most important thing is for corporations to begin. Many are on their way to understanding their current emissions levels and emissions reductions over time. And there has been a significant amount of effort from sustainability teams, risk teams, and investor-relations teams (particularly ESG-oriented investors) to improve dialogue. But when you look at the work ahead, there’s not only the idea of getting a good understanding of the emissions, the emissions profile, and the carbon footprint of the enterprise. But also, consideration of the emissions profile of the supply chain for which that company operates. And more importantly- begin to incorporate the two, increase transparency, and embed an integrated transition plan. If we believe the future of business is sustainability and that oil companies and oil economies are moving toward global net zero: companies must develop transition plans that are commercially smart and underpinned by data. Ultimately, businesses must be allowed to perform their critical functions, meet expectations, and deliver for all stakeholders.
What were some of the key observations from the aviation community at MROAM 2022 in Dallas?
We had a wonderful panel at MRO, and it was great to be there alongside representatives from Boeing, Pratt & Whitney, Southwest Airlines, and Lufthansa Technik. The panelists raised great points that truly reflected the industry, the MRO community, and the broader challenges ahead. The panel as a collective expressed a deep commitment to driving the necessary changes to embrace low carbon technologies and collaborate to help the aviation industry achieve its own net zero ambitions. For example, the panelists spoke about innovations surrounding aircraft engine technology, aircraft maintenance, digital tools, and capabilities to help advance operations. And, of course, deep commitments to scaling up sustainable aviation fuels to help drive a reduction in greenhouse gas emissions.
As a whole- what does the future look like with regards to climate and sustainability?
My view is the business community is sincerely working on climate and sustainability efforts and constantly progressing. The data is improving, the methodology and frameworks are improving, the governance is improving, and the supervisory and regulatory frameworks are improving. My hope is we will continue to make significant progress in reaching the ambitions of the Paris agreement, we will improve the efficiency of our energy systems, we will moderate and change behaviors, and we will advance public policies that reinforce the appropriate system incentives to drive the necessary changes. The future of sustainability is integrated with comprehensive business strategy. And in that regard, I’m encouraged as I see people internalizing the externality of climate. There are prices on carbon, emissions reductions, and appealing product and service innovations that emphasize the transition to a low-carbon economy.