Six top lenders to the aviation sector – Bank of America, BNP Paribas, Citi, Crédit Agricole CIB, Société Générale and Standard Chartered – have formed an alliance aimed at decarbonising the sector. The group has partnered with environmental think tank RMI’s Centre for Climate-Aligned Finance to establish the Aviation Climate-Aligned Finance Working Group.
Before the end of 2022, the working group will create a collective climate-aligned finance (CAF) framework to define common goals to decarbonise aviation. The framework will constitute a commitment by participating financial institutions to annually assess and disclose – consistent with the UN-convened Net-Zero Banking Alliance (NZBA) – the degree to which the greenhouse gas emissions from the aircraft, airlines and lessors they finance are in line with 1.5°C climate targets.
The working group will create the measurement methodologies, emissions benchmarks, data pathways, and reporting and governance structure of the CAF framework in collaboration with existing decarbonisation initiatives such as the Glasgow Financial Alliance for Net Zero and the Clean Skies for Tomorrow coalition.
Other financial institutions will be invited to adopt the framework by year end. The framework will enable lenders to assess the emissions of their aviation loan books and work with clients to report their emissions, fund lower-carbon solutions and support investments in new technologies, such as sustainable aviation fuels. RMI will ensure the objectives of companies in the aviation sector and their financial partners are aligned and actionable.
The aviation sector accounts for 2.5% of global CO2 emissions and air traffic is projected to increase significantly through 2050, in spite of the effects of Covid-19 compounded by the war in Ukraine. In a business-as-usual scenario, aviation alone could use up to 10% of the planet’s remaining global carbon budget by 2050.