Why non-financial reporting matters in the aviation sector
By Ashutosh Gupta, TMF Group’s head of ESG delivery, and Pierre Lechat, TMF Group’s head of ESG solutions
While some of the world’s rules and regulations around environmental reporting may have been relaxed, deferred or even removed recently, the need for advancing sustainability in the aviation industry has not gone away for the aircraft leasing industry. Indeed, you could argue there has never been a better time for aircraft lessors to get their environmental reporting into shape, as investors, customers and suppliers increasingly take sustainability criteria into account in their decisions.
In a drive to reduce administrative burden and boost competitiveness for their resident businesses, several jurisdictions have scaled back, delayed or even cancelled their environmental reporting regulations over recent months.
One notable example was the March 2025 decision by the US Securities and Exchange Commission to end its defence of its climate disclosure rules, the Climate-Related Disclosure Standards. This has effectively removed the regulation requiring companies to report on climate risks and greenhouse gas emissions (without actually removing the rules).
Similarly, in February 2025, the EU proposed to soften its Corporate Sustainability Reporting Directive (CSRD) by simplifying and minimising the administrative reporting burden and reducing the number of companies in its scope. With the Omnibus proposal, only companies with more than 1,000 employees and either a turnover above €50 million or more than €25 million in total assets will remain in scope.
The EU has also postponed by two years the application of all reporting requirements in the CSRD for companies that are due to report for the fiscal years 2026 or 2027.
At the same time, many jurisdictions (including the States of California and New York) are also introducing or firming up their environmental reporting requirements.
What should aircraft lessors do in the face of such shifting regulatory goalposts?
Why driving sustainability is still important
Aircraft lessors have a distinct and pivotal role to play in environmental reporting, particularly around carbon emissions. While lessors do not directly operate aircraft, their decisions regarding aircraft types, fuel efficiency and fleet renewal significantly influence broader aviation sustainability.
“A company that transparently reports its environmental commitments and actively manages environmental impacts can gain a competitive advantage in areas such as borrowing costs, access to capital and investor interest.”
By proactively disclosing their strategies and performance, especially in areas such as fleet renewal toward newer, fuel-efficient aircraft, aircraft lessors can gain significant credibility and trust among investors, customers and suppliers. Sustainability reporting positions lessors as responsible partners, aligned with emerging environmental regulations and customer sustainability commitments.
Furthermore, lessors demonstrating leadership in transparent environmental reporting attract preferential financing terms, given that investors increasingly favour sustainable and green investments. A company that transparently reports its environmental commitments and actively manages environmental impacts can gain a competitive advantage in areas such as borrowing costs, access to capital and investor interest.
Additionally, non-financial reporting can help lessors stand out in a competitive marketplace. By clearly communicating their contributions to aviation sustainability, they can distinguish their brand from competitors, and secure longer-term partnerships with airlines, suppliers and other stakeholders.
By initiating environmental reporting today, aircraft lessors can anticipate and prepare for future regulatory shifts and market demands. As we have seen, regulations are continually evolving, and companies that build in transparency around environmental performance mitigate the risk of future compliance costs and are better positioned to proactively adapt to any forthcoming requirements.
Seven steps to sustainability reporting
Beginning the journey towards environmental reporting can seem overwhelming, especially given the uncertainty around the future regulatory landscape. However, by breaking the task into clear, achievable steps, companies can get on the right path.
Step 1: Assign clear accountability
The first critical decision is to determine who will oversee emissions reporting. Should accountability fall to the chief financial officer (CFO) or the chief sustainability officer (CSO)? While financial reporting is demanding enough, it benefits from decades of well-established processes and metrics. Non-financial reporting introduces numerous additional data points, suggesting a dedicated CSO may be better positioned to lead this effort.
Step 2: Select priority areas and define scope
The next step is to identify and prioritise the most relevant environmental performance issues for the business and stakeholders. Companies should evaluate the areas already being addressed effectively and those requiring improvement. They should clearly define the reporting boundaries, specifying relevant regions, subsidiaries, partners and suppliers. Prioritisation ensures that resources are focused on the most impactful material issues, maximising efficiency.
Step 3: Collect and analyse data
After determining material issues, companies should begin gathering data from sources such as internal documentation, stakeholder discussions and industry benchmarks. This information should be analysed to establish the current baseline and performance levels, and identify existing gaps between current outcomes and desired performance.
Step 4: Establish targets
With data analysis complete, companies should set specific and measurable reduction targets. Goals should challenge the organisation, yet remain achievable and align with industry benchmarks or international standards.
Step 5: Create and execute an action plan
The next step is to develop a detailed action plan which outlines concrete steps to address the identified gaps and meet emissions targets. This involves assigning clear responsibilities, allocating sufficient resources and setting execution timelines.
Step 6: Track and disclose progress
Regularly monitoring performance against established targets is vital to assessing the effectiveness of actions taken. Ideally, companies should have specific key performance indicators to measure progress, and communicate results to stakeholders through regular emissions reporting.
Step 7: Engage consistently with stakeholders
Maintaining ongoing engagement with internal and external stakeholders — including employees, investors, customers, and suppliers — provides essential insights, fosters collaboration and enhances trust. Internally, educate and involve employees in sustainability initiatives. Externally, regularly update stakeholders on progress and challenges, and actively seek their feedback.
Effective sustainability reporting should be seen less as a compliance obligation and more as a strategic investment that generates competitive advantage through transparency. For aircraft lessors, this brings commercial advantages, including stronger customer loyalty, enhanced investor attractiveness, robust supplier relationships and proactive risk management. The time for non-financial reporting is now.