Leading financial institutions serving the global aviation industry—Bank of America, BNP Paribas, Citi, Crédit Agricole CIB, Societe Generale, and Standard Chartered—have collaborated to design a climate-aligned finance (CAF) framework aimed at facilitating decarbonization efforts within the sector.
These banks have established a working group to formulate a unified CAF framework that sets common objectives for decarbonizing aviation. The coalition emphasizes that this framework will enhance consistency and transparency in emissions reporting, establishing a standardized approach for measuring progress against climate targets. With the CAF framework in place, financial institutions will be better equipped to evaluate the emissions associated with their aviation loan portfolios and collaborate with clients to enhance emissions reporting, finance lower-carbon solutions, and foster investments in innovative technologies.
The aviation industry is responsible for approximately 2.5% of global CO2 emissions, with air traffic expected to rise significantly by 2050. In a scenario of continued growth without intervention, aviation could consume up to 10% of the Earth’s remaining carbon budget by that year. In response, the industry has embarked on initiatives such as the International Air Transport Association’s commitment to reaching net-zero emissions by 2050.
To achieve these ambitious goals, the aviation sector aims to invest in more efficient aircraft, facilitate the development of cutting-edge aviation technologies, and accelerate the transition to sustainable aviation fuels (SAF). The financial sector will be instrumental in funding the necessary projects, technologies, and companies involved in this transition to net-zero emissions.
José Abramovici, global head of the asset finance group at Crédit Agricole CIB, stated, “Our objective is to create a robust and effective framework that benefits all stakeholders within aviation finance, including banks, investors, airlines, and lessors. We strongly believe that decarbonization is essential for securing the long-term viability of the aviation industry.”
The aviation CAF framework will draw upon lessons learned from the Poseidon Principles, established for maritime shipping, as well as an upcoming CAF agreement for the steel sector. Introduced in 2019 with initial signatories from 11 banks, the Poseidon Principles have since expanded to include 29 signatories, representing over 50% of global ship financing.
Banks interested in participating in the aviation CAF framework are encouraged to submit an expression of interest.