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July 8, 2022

ESG Top Trends: ADS ESG Impact

Challenges such as climate change and human rights concerns are receiving increasing global environmental, social, and governance (ESG) attention. As a result, there is a growing focus on aerospace and defence companies adapting to and managing their risks.

Listed below are the ESG impacts on the aerospace, defence, and security (ADS) sector, as identified by GlobalData.

Air travel carbon emissions are increasingly under intense ESG scrutiny

Aircraft engines are now responsible for up to 2% of the world’s carbon output, and aerospace and defence leaders will increasingly seek to utilise more sustainable technology and generate fewer carbon emissions.

Although sustainability in defence might be expected to be relevant mostly to the industry rather than the end-user, it is becoming increasingly important for modern militaries to also adopt ESG strategies For instance, using renewable energy in deployed environments reduces the supply chain (logistical tail) and increases resilience to supply shocks.

A variety of technologies and approaches are being developed to increase fuel efficiency and reduce caron emissions. Sustainable aviation fuels (SAFs) are a promising alternative to traditional jet fuel, potentially reducing CO2 emissions by 80%. In the longer term, electric propulsion and hydrogen-powered aircraft will be the technologies that drive zero-emission aircraft

Defence primes and militaries must increase visibility and control over downstream supply chains

In terms of social sustainability, the process of manufacturing weapons and aerospace platforms is resource-intensive, and deposits of the rare minerals required are often found in countries with problematic human rights records.

Good corporate governance improves resilience to cyberattacks

Aerospace and defence firms possess highly classified information, making them attractive targets for cyberattacks and ransomware attacks. Optimising cybersecurity across the whole supply chain is of paramount importance. Since products in defence have extensive supply chains, there is a growing need for more secure cyber systems downstream of major suppliers.

This is an edited extract from the ESG (Environmental, Social, and Governance) Top Trends by Sector – Thematic Research report produced by GlobalData Thematic Research.

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