Corporate social responsibility, or CSR as it is known in common parlance, refers to the practice or business model which holds a company accountable for its actions – to itself, to the stakeholders and also to the general public. The foundational concept behind CSR is that a corporation of any kind cannot function in isolation. As such, the surrounding communities along with the people it is catering to are very much a part of it. As a result, a corporation must make itself sustainable in the long run by taking responsible decisions that take into account the welfare of the local communities and its stakeholders. Every major company in the world today has a set of CSR policies, which are usually targeted towards the greater good – these may include environmental policies, social welfare policies and so on.
China Airlines is the largest airline company in Taiwan, and also the flag carriers of the Republic of China. The headquarters of China Airlines are Taoyuan International Airport and provides services in more than 102 cities, spread out across Europe, North America, Oceania and Asia. The company has more than 1400 international and domestic flights in a week, and serves more than 20 million customers in a year. Safe to say, China Airlines is one of the most important globalized companies in China. As a result, it is imperative for the company to maintain a sustainable CSR policy, which shows the goodwill of the organization. The company has a well defined and detailed environmental and climate change policy, which will be critically analyzed in this report.
At present, China and its cities are plagued by numerous environmental issues, which have been affecting the biophysical health within the country along with the health conditions of people. Governmental oversight, rapidly increasing population and consequent commercialism, growing industrialization – these are just some of the factors which have contributed to the environmental issues in China. The Environmental Protection Agency states that if the rating of air pollution exceeds 300, the air would be declared unfit for breathing. In China, the average number of days in a month when the rating exceeded 300 was 19. On some days, the ratings reach an alarming 800 or more, which is equivalent to the air within smoke lounges. The increasing number of manufacturing companies around the world, with lack of control and environmental checks, has contributed to such deplorable air conditions. The governments around the world have realized the need for policies and measures to counter the growing issues. However, they have proven to be inadequate. It must be realized that actions and measures simply on part of the government would not be sufficient to tackle the increasing global problem. Thus, there is an added pressure on the companies to incorporate environmental policies as part of their CSR, so as to do their bit.
Airline companies like China Airlines contribute significantly to air and water pollution. For instance, the exhaust that is released in high amounts during the takeoff and landing of planes contain massive amounts of nitrogen oxides and sulfur oxides, which cause air pollution. Similarly, noise pollution is another major concern in the surrounding areas near airports. As a result, it is imperative for China Airlines to check its environmental impact and ensure that their practices have minimum consequences as far as the environment is concerned. CSR initiatives which concern the environment would be instrumental in affecting climate change and promoting efficiency in utilization of energy resources. In fact, implementation of environmental policies as part of CSR would help in achieving economic growth and would also promote a competitive landscape that causes companies to rethink and renovate product designs, enhance operational efficiency and seek out improved technology which can reduce impact on the environment.
China Airlines has recognized the value and the irreversible nature of the environment, and believes that it too has a responsibility to protect the natural resources of the environment. In order to incorporate the same as part of its CSR policy, China Airlines has established four essential principles which promote environmental management and energy conservation and six policies pertaining to the same. The principles are:
The environmental promotion strategies of China Airlines are based on a principle of systematic risk management, assessment of potential corporate environmental risks and active measures to prevent them. The PDCA (plan, do, check, act) cycle is used to ensure that the environmental promotion strategies are up to date. Strategies include the implementation of policies such as ISO 14064 Greenhouse Gas (GHG), ISO 14001 Environmental Management System, ISO 50001 Energy Management System and Accounting & Verification. Along with that, the company has also implemented training and awareness programs for the employees and execution of KPIs or Key Performance Indicators.
Carbon management refers to the process of controlling emissions of carbon which is a byproduct of most businesses, including airlines. During the takeoff and landing of planes, a large number of harmful gases are released into the air, which could lead to carbon emissions. According to the UN, at least 2 per cent of the total carbon dioxide emissions worldwide are a result of the functioning of the aviation industry. The industry is only growing at present; this means that the carbon dioxide emissions owing to the aviation industry is expected to grow by at least 3 to 4 per cent in the upcoming years. In order to reduce the carbon footprint of the company, China Airlines has taken certain measures. In fact, the carbon management aims of the company are to reduce the carbon emissions by at least 152,076 tons by the year 2018. These are some activities which are a part of the company’s carbon management policies:
China Airlines has also taken sufficient measures to reduce carbon footprint and level of emissions released during activities at the airports. The emission management process at China Airlines is mainly composed of five parts7.
The climate change policies of China Airlines are as follows:
In the case of airlines, it is fuel that accounts for nearly one third of the entire operational costs. It is also the burning of fuel which results in maximum toxic emissions. In an attempt to reduce the amount of fuel burnt during flights, certain regulations have been imposed. For instance, there are stringent policies with regards to fuel savings, route planning and dispatching. For instance, certain routes require more fuel than others. As such, these routes should be avoided. Instead, shorter routes would reduce the wastage of fuel. Similarly, the airline has taken measures to introduce new fuel efficient, green aircrafts7.
The stakeholder theory is a theory in corporate social responsibility which deals with business ethics and is concerned with the morals and values which are required in management of an organization. According to this theory, an organization can never function in isolation. In other words, an organization is liable to cater to its stakeholders, or people the organization is answerable to.
The stakeholder salience model, which was introduced by Mitchell, Agle and Wood in the year 1997 proposed that each organization has potentially eight kinds of stakeholders with three primary attributes. The three attributes are power, legitimacy and urgency. Legitimacy refers to the relationship of the stakeholder with the firm while urgency refers to the claim that the stakeholders have on the firms. Power refers to the ability of the stakeholders to influence the firm. The eight types of stakeholders are as follows:
The concepts of corporate social responsibility and stakeholder salience are two distinct concepts; yet, they overlap at certain points. One major common factor for both the theories is the fact that both the stakeholder theory and the CSR theory integrate the societal interests into the business operations of an organization. Any organization is embedded in the society. The CSR theory proposes that an organization of any kind should be oriented towards the society at large. On the other hand, the stakeholder theory argues that every organization should focus on building positive relationships with the stakeholders and should create value for them.
Like other companies, the stakeholders of China Airlines are also both internal and external. At China Airlines, the company takes all its major sustainability related decisions in compliance with stakeholder expectations. The company has a robust stakeholder engagement policy, where both the internal and the external stakeholders of the company are involved in the decision making process. The company has recognized the fact that the stakeholders are the people who stand to be affected by the environmental policies of the company and have included a robust stakeholder engagement policy as part of its operations. The company also maintains a strong rapport with its internal stakeholders, namely the employees, by communicating with them in the following manner:
It must be realized that airports are complicated networks of processes and people and as such, involve multiple stakeholders who are at stake. Each of these stakeholders has a different set of expectations and demands which must be addressed. The main stakeholders in this case would include employees, customers, suppliers, shareholders, local communities and financiers. While applying the stakeholder salience theory, it can be said that the employees and the customers are the dominant stakeholders of China Airlines, and have most power to influence the organization. The customers, who are external stakeholders, have more claim over the organization than other stakeholders but they are dependent stakeholders. The shareholders may be called discretionary stakeholders, who have legitimacy and power and may choose to execute the same.
The Lufthansa group is another major international airline company, which prides itself on having a robust environmental program. While China Airlines does have a strong and all encompassing environmental program, the Lufthansa group has developed an ambitious strategy for environmental and climate responsibility, by taking into account the bigger picture. The company has an elaborate policy and plans to incorporate further progress by the year 2020. Although certain aspects of its environmental policy are similar in nature to that of China Airlines, the Lufthansa policies are more wholesome cover a range of areas. These are a few aspects of the Lufthansa environmental policy.
Although the China Airlines environmental strategy is well developed and all encompassing, application of the stakeholder theory and comparison with other airlines reveal a few areas of improvement within the policies. Implementation of a new and enhanced policy would be in favor of the company itself, since it would help the company win the goodwill of the stakeholders. A few recommendations are:
To conclude, it can be said that like most companies, an airline company too needs to be held accountable for its impact on the environment. Given China’s growing environmental problem, China Airlines, which is China’s major airline company, needs to develop a strong and well defined environmental policy which would reduce impact on the environment. The company has taken requisite measures in the past and has developed an environment management policy; however, implementation of these recommendations would strengthen their corporate social responsibility.
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