Norwegian annual report 2013

Carbon Disclosure Project

Carbon Disclosure Project (CDP) Methodology - and why Norwegian won’t participate

A central environmental measurement of the kind that CDP is trying to achieve has obvious potential benefits. For Norwegian, it is important to be transparent about the Group's activities, including their environmental effects. As a starting point, Norwegian is positive towards measures that help increase environmental awareness.

However, the CDP methods completely miss the point with regard to the airline industry. Specifically, the way the total points are calculated means that the worst airlines from an environmental perspective are often represented as the best. Our main competitor in Scandinavia, which has 30 percent higher CO2 emissions per production unit, is represented as an environmentally friendly company. Our largest competitor in the Finnish market with 17 percent higher unit emissions even earned a rating of 92 out of 100 in the 2012 CDP report, making it one of the survey’s top companies. This means that the CDP report appears grossly misleading as it does not represent the respective airlines' actual environmental effects in an adequate manner.

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More specifically, Norwegian questions the points below which mean that inefficient airlines with high emission rates are rewarded:

  1. CDP scores absolute emissions reduction irrespective of starting point.
    It is obviously easier to reduce emissions from a high level than a low level. This implies that the worse the airline in question performed last year, the easier it is to obtain a high score this year.
     
  2. CDP scores CO2 emissions per dollar revenue.
    The more expensive the average fare, the higher the score in CDP. Jet fuel is typically the single largest cost item for airlines. Efficient airlines which consume little fuel can afford to charge lower fares. That is punished by CDP.
     
  3. CDP scores CO2 emissions per full-time employee.
    The less efficient and labour intensive operations, the higher the score. This also intensifies the argument made under item 2.
     
  4. CDP scores the response rate of each participant. The more questions answered, the higher the score.
    The greater the torrent of words, the higher the score in CDP. Typically, the worse an airline performs from an environmental point of view, the more effort is put into producing comprehensive glossy reports, effectively (and literally) laying a smoke screen over actual performance through information overload.
     

For airlines, there is in reality just one key figure that measures environmental efficiency: fuel consumption per passenger per kilometre. CDP does not include a single measure that shows this. In practice, this means that the most environmentally friendly airlines are not recognised for this.

Norwegian has been in touch with CDP repeatedly, and tried to explain the challenges related to CDP's methods. Their response is that they may be prepared to look at it in the long term, if Norwegian pays for it ("[CDP] would be very interested in developing a sector module for the aviation industry if funding becomes available"). 

Norwegian also questions CDP's "black list" of companies that for various reasons do not respond to their enquiries. This black list is used actively in the media, and companies that have not responded are presented as being bad environmentalists as is demonstrated in this article from the daily business newspaper “Dagens Næringsliv” . Norwegian does not support CDP's practice of using what can be best described as a form of indirect coercion to get companies to spend time and resources on a very extensive questionnaire that is voluntary, and in Norwegian's case, irrelevant and misleading.

Norwegian invests in aircraft at a list price of USD 25 billion in order to get the most cost-effective and environmentally friendly fleet possible. This makes the airline one of the most environmentally friendly in the world, which is likely a more appropriate use of the Group’s funds than CDP.