3 months ago

Annual report and accounts 2016

46 Sustainability

46 Sustainability continued Sustainability overview Governance As IAG’s sustainability strategy matures, and as part of our materiality study and risk assessment in 2016, we have extended the scope of our sustainability governance to include all the operating companies and business units within the Group. The IAG Management Committee and Board have also approved the establishment of a new Sustainability Committee bringing sustainability in line with other governance models managed by the IAG Management Committee. Materiality In 2016 we updated our materiality assessment to clarify the relative importance of the Environmental, Social and Governance (ESG) issues for IAG. Based on the Global Reporting Initiative (GRI) guidance, we drew on external stakeholder materiality feedback and balanced this through the same scoring grid with input from our own understanding of the most material issues. Sustainability structure The exercise proved valuable in checking that IAG’s sustainability strategy and plans give proportionate and appropriate attention to each ESG matter at both Group and operating company level. It also informed our approach to this report, enabling a focus on the material issues of most interest to our stakeholders. We intend to repeat the exercise periodically to gather feedback from additional stakeholder groups to help further refine and focus our sustainability reporting. Sustainability risks and enterprise risk management The IAG Sustainability Committee reports regularly to the Management Committee and at least once a year to the IAG Board on sustainability risks, in line with the requirements of our Spanish Corporate Governance Code. This year we have aligned our sustainability strategy to the IAG Enterprise Risk Management (ERM) function. We have identified our sustainability risks following the ERM methodology and all risks have owners within the operating companies. We work with them to ensure that the risks are appropriately managed to mitigate them effectively. The sustainability risk assessment identified two areas this year where further management attention was needed, supply chain sustainability governance and the consistency of approach to environmental compliance. These have now been addressed with action plans put in place following the risk assessment. We consider the impact of sustainability and environmental matters as part of our overall strategy and planning processes including sustainability risks. IAG Board IAG Audit & Compliance Committee IAG Management Committee IAG Sustainability Committee IAG Sustainability Aer Lingus CEO British Airways CEO Iberia CEO Vueling CEO IAG Cargo CEO Avios CEO IAG GBS CEO Operating Company Sustainability Representatives IAG Sustainability Network INTERNATIONAL AIRLINES GROUP Annual Report and Accounts 2016

47 UN Sustainable Development Goals In September 2015, as part of the United Nation’s Summit on Sustainable Development, all 193 Member States of the United Nations adopted a plan to “end poverty, fight inequality and injustice, and tackle climate change by 2030. At the heart of this ‘Agenda 2030’ are 17 Sustainable Development Goals (SDGs). Fulfilling these goals will take significant effort by all sectors in society and it is widely recognised that business has an important role to play. For IAG, it is possible to draw connections to many of the UN SDGs and will include those connections in the future performance reporting. However, we have also selected a smaller number of SDGs, set out in the table below, that we believe reflect the material issues and opportunities for IAG. For these, during 2017 we will be working to align our strategies in support of these goals and undertaking formal commitment and reporting via UN SDG channels. UN SDG selected for IAG sustainability strategyRelevance to IAG and key opportunities for action in 2017 and beyond Goal 5: Gender equality: Achieve gender equality and empower all women and girls. Goal 7: Affordable and clean energy: Ensure access to affordable, reliable, sustainable and modern energy for all. Goal 8: Decent work and economic growth: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. Goal 13: Climate Action: Take urgent action to combat climate change and its impacts. Gender equality has been a key consideration in planning the long-term composition of the IAG Board itself and further strategies are in place across the organisation to encourage greater gender equality. The Group reports employees by gender. IAG is proactively working with partners in fuel production and waste management to develop the technology and market for sustainable aviation fuels which not only help address climate impacts but also support affordable, reliable energy supply for aviation and other users. As one of the largest airline groups in the world, IAG contributes to global economic prosperity by transporting goods and connecting people, places, communities and cultures. In 2016 IAG transported over 5,454 million tonnes of cargo kilometres, carried over 100 million passengers, employed 63,387 people (average manpower equivalent) and paid €318 million in taxes. IAG has and will continue to take a strong leadership role in shaping national and international policy to support aviation in addressing its climate change impacts. We also actively support and implement the industry’s four pillar strategy to address climate impacts by pursuing more efficient aircraft operations, investing in improved technology including newer aircraft and sustainable low-carbon fuels, and actively supporting global carbon pricing for aviation. Strategic report Corporate governance Financial statements Additional information Sustainability future focus In aviation, due to the long‐term development timescales for new aircraft technologies and infrastructure, it is important we continually seek out opportunities to innovate to address our sustainability impacts. Here are some of the exciting opportunities we are working on: Real time data sharing to optimise fuel efficiency Internet connection to our aircraft is currently being deployed in IAG’s airlines and will offer opportunities to optimise flight efficiency. In 2017, we are implementing new Group-wide fuel efficiency software to enable better tracking and benchmarking of our operational flight efficiency, providing a platform to evolve to real-time fuel performance management. Deriving sustainable aviation fuels from waste materials IAG is actively exploring opportunities in this area and, with the right policy incentives in place, we believe aircraft could be operating on up to 25 per cent sustainable alternative fuels by 2050. In 2017, we continue to lobby for policy support for these fuels and intend to formalise our working with strategic partners to progress one or more UK projects. Carbon pricing The Paris climate change agreement demonstrates both government and industry commitment to develop low carbon economies. IAG believes putting a cost on carbon is the most effective mechanism to address carbon emissions global market based measure, Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), is a positive step towards full carbon pricing for the aviation sector and in 2017 IAG will continue to engage in international discussions to further build on this.

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