How has an aerospace company responsibly managed its environmental, social, and governance risks and paved the way for its sustainable growth?

A Europe-based aerospace company specialized in producing and distributing various aerospace products had a strong presence in the domestic and international markets. However, the company had been focusing solely on short-term profitability and growth and was found neglecting environmental, social, and governance (ESG) practices. As a result, the company found itself at the receiving end of fines and penalties from regulatory bodies. This considerably damaged the company’s reputation and negatively impacted the stakeholder’s perception. The company requested Research Nester analysts to draw out a plan of action to facilitate a smooth integration of ESG solutions into the company’s policies and practices

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An overview:

1

The aerospace company was founded in 1970 and had become well-established with a strong market position.

2

The company primarily was in the designing, manufacturing, and delivering aerospace products, services, and solutions to customers worldwide.

3

The company also did not adhere to sustainable methods or conservation practices resulting in environmental, social, and governance risks.

4

An inquiry into its facility led to the discovery of its non-compliance with ESG practices.

5

The company was fined and also penalized, which dented its reputation and also resulted in a loss of market share.

6

The company leadership requested Research Nester consultants for their intervention to help the company sail through the crisis.

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The Story

The aerospace company was established in 1970 as the largest aeronautics and space company in Europe. The Company had been engaged in inventive mass-producing aircraft and consistently attain about half of the commercial airliner’s orders. Climate change and human rights concerns are receiving more and more attention these days as the government is focusing more on environmental concerns. During the production of goods carbon emissions and noise pollution considerably harmed the ecosystem. This started affecting air quality and was harming human health. The hazard was soon detected by regulatory authorities. Since the company had entirely neglected the environmental, social, and governance protocols, in 2018, the company was booked under the Environment Protection Act, of 1986. As the news of its penalty spread, the company’s reputation suffered a significant blow. Consumers became increasingly aware of the negative impacts caused by the company’s operations, which led to a decline in demand for its products. Concerned buyers and retailers began shifting their preferences towards more sustainable and ethically produced aerospace goods. They started turning to competitors who prioritized long-term sustainable ESG practices. The company had been flouting all environmental, social, and governance norms which raised red flags for investors, hindering the company’s expansion and restricting the funding for innovations and sustainable initiatives. Finding themselves cornered and totally at a loss, the company leadership in December 2019, sought the services of Research Nester analysts to rework the company’s strategy to integrate ESG practices for sustainable growth and profitability.

Our Solution:

The major hindrance to the company’s viability and robust growth was its non-compliance with environmental, social, and governance protocols. Since the aerospace industry is already said to be responsible for a significant amount of carbon footprint and noise pollution. Research Nester consultants provided a brief insight into the environmental, social, and governance (ESG) scenario and also offered a customized solution that provided an in-depth analysis of the benefits. RNPL consultants further suggested the following strategies that would work for incorporating ESG practices:

Research Nester consultants suggested revamping the company’s security infrastructure practices in the following ways-

  • Implementing environmentally friendly methods in the production and the process.
  • Reducing carbon emissions and noise pollution.
  • Apart from that, propelling the introduction of electrical aircraft.
  • Using lightweight composite material to reduce the weight of airframes.
  • Strictly monitoring emissions and disposal systems.
  • Keeping track of changing consumer demands and preferences.
  • Position itself as a responsible and reliable company, committed to Environmental, Social, and Governance practices.

Results

The company recorded a steady growth of about 12% on an annual basis from 2018 onwards. Nevertheless, when the company was facing a significant fine for not complying with ESG standards, this growth slowed down. The company was able to transform its market position by incorporating the strategies proposed by analysts at RNPL, which allowed it to develop a reputation over time. In 2020, the revenue was 350 million Indian rupees, an increase of 10 % over 2019, and has been gradually rising to 18% in 2021 and 27% in 2022. At last, the company has managed to return production and growth to a point of stability and progress toward sustainable and lasting expansion.

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Swara Keni

Head- Global Business Development

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