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Annual report and accounts 2016

50 Sustainability

50 Sustainability continued Sustainability in action Our actions in support of our sustainability strategy Climate Change Global aviation carbon offsetting scheme In 2016 we made a significant step towards our industry goal of carbon neutral growth from 2020, when ICAO, achieved agreement to develop CORSIA, the world’s first global market based measure to address aviation carbon emissions. From 2021, airlines will buy emissions units to offset their share of the sector’s growth emissions to fund sustainable carbon reduction projects around the world. The voluntary first phase from 2021 to 2026 has attracted strong support from the international community with 66 nations, so far declaring their commitment to participate. Over its life to 2035 it is expected to cover over 85 per cent of international aviation emissions growth. IAG and our airlines have been involved in the development of CORSIA for eight years and will continue to play an active role over the next three years. IAG expects the CORSIA scheme will replace international aviation’s inclusion in the EU emissions trading system to avoid double regulation. Successfully implementing CORSIA will allow us to develop further plans to deliver on our longer-term target of a 50 per cent reduction in CO 2 emissions by 2050. Sustainable aviation fuels In 2016, Oslo and Los Angeles airports introduced a regular supply of sustainable jet fuel for use in commercial airliners. These milestone projects benefitted from regional support and as the cost differential between fossil and, jet fuel currently is significant, this demonstrates government policy support is essential for these emerging technologies. Global policy development has progressed to address the new reporting methods required to take account of sustainable jet fuels within the CORSIA scheme. The government has launched a formal UK consultation on future fuels policy to 2030 that includes aviation fuels. We are committed to investing in sustainable fuel technologies and to working with a range of partners to achieve them. Carbon fund British Airways’ carbon fund uses customer donations from flight bookings on ba.com to invest in renewable energy and energy efficiency projects to provide community benefits and mitigate climate change. The Carbon Fund supported seven additional energy projects in 2016, bringing the total to 21, exceeding €2 million in community benefits. We also invested in projects for schools and community leisure centres in the UK but the fund also supported the Ol Pejeta Conservancy in Kenya with a solar pump to provide a reliable water supply for local communities and wildlife. The solar power also provides free Wi-Fi for local schools. IAG fuel efficiency network The IAG fuel efficiency network enables each airline’s experts to share best practice. This year we undertook further single engine taxiing, continuous descents, compressor washing regimes and, procuring a Group-wide fuel efficiency software system. This year Aer Lingus’ introduced an improved descent procedure into London Heathrow. Aircraft can fly a more efficient gradual descent towards the holding point. With 8,000 flights a year on that route this saves over 300 tonnes of fuel, and over 1,000 tonnes of CO 2 per annum. Supply chain IAG engages with suppliers on standards of quality, safety, environmental responsibility and human rights. Supplier audit priority is based on annual expenditure, factories located in high-risk geographies, and the supplier strategic importance IAG also continues to strengthen its partnership with Sedex, a nonprofit organisation dedicated to driving improvements in responsible and ethical business practices in global supply chains. In 2016 IAG continued progress on health, safety and environment by executing audits and working on mitigation actions together with our suppliers through a focus on safety leadership, training and local programmes. Noise Continuous descent operations (CDO) help reduce noise by keeping aircraft higher over the ground for longer, and save fuel. CDO performance is closely monitored in the UK, and British Airways and Aer Lingus are already among the top performing airlines, regularly achieving over 90 per cent compliance. In 2016, Iberia’s crew training to support CDOs achieved 22 per cent improvement to 79 per cent compliance, and Vueling achieved 15 per cent improvement to 62 per cent compliance. During 2017 we will continue our focus on this and aim to see all our operating companies achieving over 80 per cent CDO compliance in the UK. We have also been working with a range of stakeholders at Madrid- Barajas airport to explore opportunities to mitigate approach noise. This is in the context of an ongoing court case where residents affected by Madrid Barajas airport’s approach routes are calling for a reduction in the number of overflights. Working with multiple stakeholders (including Madrid-Barajas Airport, Airbus, Iberia and IAG) we are pursuing operational and technical innovations to help mitigate noise and achieve an acceptable balance for all stakeholders. INTERNATIONAL AIRLINES GROUP Annual Report and Accounts 2016

51 Air quality – electric tug trial British Airways began trialling the Mototok electric pushback device in April 2016 to test whether it would be suitable for the airline’s shorthaul operation in Terminal 5A at London Heathrow. The device allows aircraft to push back entirely by remote control. As well as reducing costs and improving safety with zero emissions it also has local air quality and climate change benefits over a traditional tug. The trial confirmed the Mototok’s effectiveness and British Airways are exploring opportunities for adoption on selected shorthaul operations. Energy efficiency IAG has begun co-ordination of data monitoring on energy efficiency and we intend to begin reporting performance on this from next year. However there has already been progress in this area over recent years; British Airways for example established a baseline in 2013 for a set of core sites, primarily those directly managed by British Airways and its facilities management suppliers. By the end of 2016 electricity use at these sites had been reduced by 25 per cent and gas use has been reduced by 46 per cent compared to 2013. Waste Reducing cabin waste is important in terms of cost, natural resources, fuel and carbon emissions. However this needs to be balanced with maintaining the quality of our commercial product and flight experience for passengers. Also, waste regulations add complexity as international catering waste from flights outside the EU is classified as category 1 waste (a high risk waste due to potential animal by-product content) and its management in the EU is restricted to landfilling or incenaration. In 2016 Iberia took a leading role in a three year EU project ‘LIFE+ Zero Cabin Waste’. Its goals are: • 5 per cent reduction in waste, • waste recovery with 80 per cent of total cabin waste diverted from landfill; • improved separation and recycling to reduce the cost of disposal, and • establish a model that can be replicated by other airlines. The project began at Madrid’s Barajas airport, where Iberia’s catering company Gate Gourmet currently collects 6,000 tonnes of cabin waste per year (4,000 tonnes Category 1). Crew and ground staff training, new equipment and new procedures are all being developed along with a new test treatment for Category 1 waste. During the project’s final year the model will be replicated at London Heathrow airport to test its transferability. Wildlife trafficking In April 2016 Transport industry leaders, including IAG, ​and intergovernmental organisations, signed the United for Wildlife Transport Taskforce Buckingham Palace Declaration. The declaration aims to reduce the levels of trafficking of endangered animals by improving information sharing, staff training and resource sharing. The endangered animal trade is a growing problem and the transport industry is looking to remove the use of our industry for this illegal trade. Modern slavery policy As part of the UK Modern Slavery Act, IAG is required to publish a Group wide statement outlining our activity in this important area. We take this issue seriously and have made efforts in the past to ensure that there are no examples of modern slavery within our business. We also conduct audits and inspections to reduce any likelihood of activity within our supply chains and also on-board our aircraft, particularly in relation to human trafficking. In 2017 we will publish a statement outlining our commitment to reducing modern slavery on our website. Strategic report Corporate governance Financial statements Additional information Charity Vueling customers and staff raised more than €250,000 in 2016. Vueling will renew their alliance with Save the Children for another year to keep supporting their work for child refugees in Europe. Flying Start, British Airways corporate charity partnership with Comic Relief, launched the Big Charity Choice in 2016. £200,000 was allocated across five youth charities who received between £10,000 and £100,000 each. British Airways Flying Start fundraising totaled £3 million in 2016. Aer Lingus has supported Special Olympics Ireland since 2003 and contributed €14,000 to the total of €650,000 raised on Ireland National Collection Day in April 2016. In 2017, Aer Lingus will again support Special Olympics Ireland, providing flight support for athletes attending the World Winter Games in Austria in March and sending five staff volunteers to support Team Ireland. Iberia participated in three main charity projects in 2016; transporting humanitarian aid to Africa and Latin America, supporting child protection with Save the Children in Guatemala City and continuing collaboration with Unicef and Amadeus on the “100% Let’s vaccinate every child” initiative. Donations of €690,000 from Iberia customers since 2013 has enabled more than 1.8 million children to be vaccinated. www.iairgroup.com

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