Strategies and governance
E1-1 - Transition plan for climate change mitigation
The Lufthansa Group has set itself ambitious climate change mitigation targets. The SBTi validation in 2022 made the Lufthansa Group the first airline group in Europe and the second worldwide with a scientifically verified CO₂ reduction target in line with the goals of the Paris Climate Agreement of 2015. The measures planned by the Lufthansa Group to achieve these targets are detailed in Section E1-3.
The Lufthansa Group is investing in various technologies to support its transition to a sustainable economy. This includes investments primarily in fleet renewal, in sustainable aviation fuels (SAF), and in operational efficiency. For example, the AeroSHARK retrofit applies an innovative surface technology that improves aircraft fuel efficiency. The Lufthansa Group is committed to expanding the range of intermodal transport by working with other transport companies to include more train and bus connections as alternatives to short-haul flights. Inpayments, own payments and final payments for aircraft, aircraft components, and aircraft and engine overhauls were up by 4% to EUR 3,923m (previous year: EUR 3,789m) in the reporting year. This represents 86% of total capital expenditures. These fleet renewal investments are also part of the reporting under the EU Taxonomy.
The Lufthansa Group is required to report on its taxonomy-eligible and taxonomy-aligned economic activities. Its carbon reduction pathway highlights that acquiring next-generation aircraft leads to an increase in taxonomy-eligible and potentially taxonomy-aligned capital expenditures (CapEx). Accordingly, its fleet renewal plans, described under the four-pillar strategy and the measures planned in this regard, can have a direct impact on taxonomy metrics. For Activity 6.19 Passenger and Freight Air Transport under Environmental Objective 1 – Climate change mitigation, the Lufthansa Group reports EUR 3,912m in taxonomy-eligible capital expenditure, representing 86% of total capital expenditure. Of the Lufthansa Group’s total capital expenditure, 0% is taxonomy-aligned within Activity 6.19. This is because the EU Taxonomy requirements go beyond those of the European regulation referenced in Annex C. Assuming that the requirements of the EU Taxonomy are equivalent to those of the European regulation referenced in Annex C, the Lufthansa Group considers that 62% of its capital expenditure is taxonomy-aligned. A CapEx plan relating to this capital expenditure is not disclosed in the taxonomy report, but full details on CapEx, OpEx and revenue are provided ↗ Applicability and disclosures in accordance with EU Taxonomy Regulation (EU) 2020/852 – 6.19 Passenger and Freight Air Transport.
The Lufthansa Group is an aviation company that generates revenue primarily from passenger and freight transport. For this reason aircraft are its most valuable assets. Currently, its transport services rely on fossil-based fuel, which results in greenhouse gas (GHG) emissions. This means that both the purchase and operation of the aircraft contribute to GHG emissions. Measures such as fleet renewal, however, lead to an overall reduction in GHG emissions from operations. Additionally, the use of SAF, for example from biogenic residuals, further lowers embedded GHG emissions. GHG emissions in transport services will also be significantly reduced by new conventional propulsion technologies, which offer substantially improved fuel efficiency over previous generations. The Lufthansa Group is closely monitoring developments in alternative propulsion technologies, including electric, hybrid-electric, and hydrogen-powered solutions for short-haul flights through its Aircraft Evaluation and Market Intelligence teams. These technologies are not yet market-ready.
The Lufthansa Group is not exempt from the EU’s Paris aligned benchmarks.
The Lufthansa Group’s Climate Transition Plan is closely linked to financial planning. Fleet renewal plays a critical role in the Lufthansa Group’s climate strategy and requires substantial capital expenditure every year. The level of fuel efficiency gains and GHG emission reductions depends on investment levels and the availability of new aircraft. A continuous exchange takes place between the Corporate Responsibility team and the Fleet Renewal department to coordinate these efforts.
The Transition Plan was developed alongside the corporate strategy and was presented and approved in a special meeting of the Executive Board.
Measures aimed at improving fuel efficiency, and thereby reducing specific GHG emissions, are being implemented on an ongoing basis. Their progress and effectiveness are monitored by a designated contact from flight operations, who directly informs the Corporate Responsibility department responsible for the Transition Plan. Carbon intensity (SBTi KPI) is tracked annually and is discussed later in this section. While the current Transition Plan primarily focuses on flight operations, efforts are also being made to decarbonise ground operations. Implementation, such as strategic planning for vehicle fleet electrification, is overseen by the Infrastructure department.
ESRS 2 GOV-3 – Integration of sustainability-related performance in incentive schemes
The emission reduction targets of the Lufthansa Group are an integral part of the corporate strategy and are regularly taken into account as part of the multi-year variable remuneration (“Long Term Incentive”, LTI) for the members of the Executive Board of Deutsche Lufthansa AG.
The Supervisory Board has set the reduction of specific CO2 emissions as a core focus for the strategic goals and sustainability targets within the long-term variable remuneration for the 2024 financial year (LTI 2024). This was derived from the current corporate strategy, according to which the reduction targets for GHG emissions are based on the indicator grammes of CO2 per revenue tonne-kilometre transported, in line with the target system for the validated SBTi targets. This environmental objective has a weighting of 20% in the assessment of the level of target achievement for the LTI 2024.