Leading lenders to the global aviation sector — Bank of America, BNP Paribas, Citi, Crédit Agricole CIB, Societe Generale and Standard Chartered — are working together to develop a climate-aligned finance framework to support decarbonisation in the industry.
The banks have formed a working group to develop a collective climate-aligned finance (CAF) framework that defines common goals for action for aviation sector decarbonisation.
The coalition says the framework will create consistency and transparency in reporting, establishing a level playing field for measuring progress against climate targets. With the CAF framework, financial institutions will be able to assess the emissions of their aviation loan books and work with their clients to report their emissions, fund lower-carbon solutions and support investments in new technologies.
The aviation sector accounts for 2.5% of global CO2 emissions, and air traffic is projected to increase significantly through 2050. In a business-as-usual scenario, aviation alone could use up to 10% of the planet’s remaining global carbon budget by 2050. The industry has initiated efforts in response, including the International Air Transport Association’s commitment to achieve net-zero emissions by 2050.
To support these goals, the aviation sector is seeking to invest in more efficient aircraft, support the development of new aviation technology and accelerate the transition to sustainable aviation fuels (SAF).
The financial sector will play a crucial role in funding the technologies, projects and companies involved in this net-zero transition.
José Abramovici, global head of asset finance group at Crédit Agricole CIB, comments: “Our intention is to propose a robust and effective framework for the benefit of all stakeholders in aviation finance including banks, investors, airlines and lessors. We firmly believe that decarbonisation is key to ensure the long-term future of the aviation industry.”
The aviation CAF framework will be based on the experience gained from the Poseidon Principles for maritime shipping and the soon-to-be-launched CAF agreement for steel. The Poseidon Principles were launched in 2019 with 11 banking signatories. Today Poseidon counts 29 signatories covering more than 50% of global ship finance.
Bank wishing to join the aviation CAF framework are invited to submit an expression of interest.