Dialogue with ESG rating agencies

Main Opinions from Experts

ESG in general

• The focus of ESG assessments for companies has shifted to a form that is more directly linked to management strategies and asks whether the governance systems are functioning effectively in resolving adverse impacts on society. Attention is given to whether the company has built a structure (a system for decision-making by management) that can enhance the sustainability of the company even in uncertain and unpredictable times.
• There is a movement to strictly eliminate greenwashing, etc. Information disclosure is required to ensure a high level of transparency and management system, including supply chain, should be disclosed.

The environment

• In the airline industry, reducing CO2 emissions is a top priority. It is not an easy problem to solve, but by clearly stating that we will take a leading position toward solving it, we can differentiate ourselves from other companies. It is important to disclose and explain to investors a clear roadmap for reductions through 2030 and 2050 (responses at both the individual company level and the industry/country level) linked to management (growth) strategies. In doing so, quantitative targets can be indicated in the short term while explanations in qualitative terms (disclosing stories) can be given in the long term.
• Leadership will be required to form a public opinion on SAF, lobby the government, and take the initiative in involving actors such as competitors.
• It is understood that credits need to be used to reduce CO2. In doing so, however, it is necessary to deploy experts who can assess the reliability of cheap credits. It is also important to sample and check sites directly to ensure reliability.
• The fact that the transition strategy states that we will not rely on credits but will instead utilize negative emissions technologies is being regarded highly. There is particular interest in technologies such as DAC (Direct Air Capture)1.
• SBTs are useful when explaining the relationship between the Paris Agreement and ICAO.

Biodiversity

• Attempts are still being made in the EU to index biodiversity. It will likely require another year or two. However, the UK government at the center has shown a sincere commitment to combat deforestation, and so asset management will also likely see a marked move to rigorously assess each company's efforts.

Human capital and human rights

• There is a large amount of interest in ANA, which identifies human rights issues based on the United Nations Guiding Principles on Business and Human Rights and implements remedial action appropriately. There continues to be a focus on strengthening supply chain management (direct dialogues with frontline workers, accepting complaints and concerns, decision-making that involves management, etc.) and the common risks of in supply chains across sectors are forced labor, working hours, and living wages.
• There is an interest in human capital management and human resources strategies that will contribute to the realization of our long-term vision and management strategies, and look it is expected that KPIs in this regard will be set and disclosed.