BS7578 - China Airlines' CSR: Environmental & Climate Policy Report

This report provides a detailed analysis of China Airlines' corporate social responsibility (CSR) policies, focusing on its environmental and climate change initiatives. It examines the company's commitment to reducing its environmental impact, including carbon and emission management strategies. The report also explores the application of stakeholder theory to China Airlines' CSR policy, assessing how the company addresses the needs and concerns of its various stakeholders. A comparison with Lufthansa Airlines' environmental strategy is included to identify areas for potential improvement. The analysis covers China Airlines' environmental promotion strategies, carbon management efforts, emission reduction initiatives, and approaches to climate change, highlighting fuel-efficient operations. The report concludes with recommendations for enhancing China Airlines' CSR practices.

Running head: CORPORATE SOCIAL RESPONSIBILITY OF CHINA AIRLINES
Corporate social responsibility of China Airlines
Name of student
Name of university

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Executive summary
The aim of this report is to study the corporate social responsibility policies of China
Airlines. China Airlines is one of the most important and renowned airlines in the country,
and thus has a moral and ethical obligation to be held accountable towards its stakeholders.
At present, China is facing severe environmental problems, which include pollution, climate
change issues and inefficient emission management. Being an airline company, China
Airlines has a significant role to play in this aspect. As such, the company has implemented a
series of environment management policies which would help in reducing the impact on the
environment. The following report is a detailed analysis of China Airlines’ environment and
climate change policy. It also analyzes the policy with respect to the stakeholder theory, to
understand how the company caters to the stakeholders. The report also compares the
environment policies of China Airlines with that of Lufthansa Airlines, to highlight room for
improvement.

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Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................4
Overview of China’s environmental problems and need for relevant CSR policies.............4
Environmental and climate change policy of China Airlines................................................5
Environmental promotion strategies..................................................................................6
Carbon management...........................................................................................................7
Emission management.......................................................................................................8
Climate change...................................................................................................................9
Fuel efficient operations...................................................................................................10
Theories of Corporate Social Responsibility: Stakeholder theory.......................................10
Application of stakeholder theory to China Airlines’ CSR policy......................................11
Comparison with Lufthansa Airlines Environmental strategy.............................................13
Recommendations and conclusion...........................................................................................14
Bibliography:............................................................................................................................15

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Introduction
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 stakeholders1. 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 on2.
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 China3. 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.
1 Tai, Fang-Mei, and Shu-Hao Chuang. "Corporate social responsibility." Ibusiness 6, no. 03 (2014): 117.
2 Suliman, Abubakr M., Hadil T. Al-Khatib, and Sumina E. Thomas. "Corporate social
responsibility." Corporate Social Performance: Reflecting on the Past and Investing in the Future (2016): 15.
3 China Airlines. 2018. "Home". China-Airlines.Com. https://www.china-airlines.com/us/en.

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Discussion
Overview of environmental problems and need for relevant CSR policies
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 lounges4. 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 problem5. 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 pollution6. Similarly, noise pollution is another major concern in the surrounding areas
4 Kojima, Reiitsu. "Environmental problems in China." In Basic Studies in Environmental Knowledge,
Technology, Evaluation, and Strategy, pp. 33-53. Springer, Tokyo, 2016.
5 Zhou, Yun, Soon-Thiam Khu, Beidou Xi, Jing Su, Fanghua Hao, Jieyun Wu, and Shouliang Huo. "Status and
challenges of water pollution problems in China: learning from the European experience." Environmental earth
sciences 72, no. 4 (2014): 1243-1254.
6 Bradshaw, Corey JA, and Barry W. Brook. "Human population reduction is not a quick fix for environmental
problems." Proceedings of the National Academy of Sciences 111, no. 46 (2014): 16610-16615.

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near airports7. 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 environment8.
Environmental and climate change policy of China Airlines
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 environment9. 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:
 In China, there are stringent policies and laws pertaining to environmental
regulations. As such, the company strives to implement environmental policies which
are in compliance with the international environmental laws and regulations.
 The policies of China Airlines are based on a principle of 5 R’s – reuse, reduce,
recycle, repair and refuse. This would reduce wastage of earth’s natural resources and
also promote conservation.
7 Arjomandi, Amir, and Juergen Heinz Seufert. "An evaluation of the world's major airlines' technical and
environmental performance." Economic Modelling 41 (2014): 133-144.
8 Pearson, James, David Pitfield, and Tim Ryley. "Intangible resources of competitive advantage: Analysis of 49
Asian airlines across three business models." Journal of Air Transport Management 47 (2015): 179-189.
9 Eaton, Sarah. "Political economy of the advancing state: The case of China's airlines reform." The China
Journal 69 (2013): 64-86.

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 It emphasizes on eco efficiency. The essence of the policy is to improve the overall
operations process so as to effectively utilize available resources and reduce waste
generated.
 Sustainability is the primary focus of China Airlines’ environmental policy. It
recognizes the importance of corporate governance in the policy, and reinforces the
policy at all levels of the organization.
Environmental promotion strategies
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 Indicators10.
10 China Airlines. 2018. "Environmental Governance - China Airlines Corporate Sustainability
Site". Calec.China-Airlines.Com. https://calec.china-airlines.com/csr/en/environment/manage-policy.html.

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Carbon management
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
emissions11. 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 industry12. 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 years13. 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
11 Chao, Ching-Cheng. "Assessment of carbon emission costs for air cargo transportation." Transportation
Research Part D: Transport and Environment 33 (2014): 186-195.
12 Cao, Qian, Jinfeng Lv, and Jun Zhang. "Productivity efficiency analysis of the airlines in China after
deregulation." Journal of Air Transport Management 42 (2015): 135-140.
13 Hansen, James, Pushker Kharecha, Makiko Sato, Valerie Masson-Delmotte, Frank Ackerman, David J.
Beerling, Paul J. Hearty et al. "Assessing “dangerous climate change”: required reduction of carbon emissions to
protect young people, future generations and nature." PloS one 8, no. 12 (2013): e81648.

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least 152,076 tons by the year 2018. These are some activities which are a part of the
company’s carbon management policies:
 Regular evaluation of statutory requirements and evaluation of compliance with
international environment standards.
 Setting annual objectives for environmental conservation with respect to operations,
in flight and also freight services.
 Update international and domestic environmental regulations and adopt
countermeasures in order to counter emerging issues.
 Promoting green accounting.
 Setting and implementing short term and long term goals in order to reduce CHG
reduction.
 Reduction of emissions from ground office.
 The company has also managed carbon rights on the basis of alterations in price of
carbon. This is in accordance with EU Emissions Trading System. The company also
conducts carbon edit operations.
Emission management
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.
 Mapping – In this case, the carbon footprint of the company is measured. The carbon
emissions within the airport premises, which the airlines will have control over, will
have to be measured and identified14.
14 Wang, Qi, Chong Wu, and Yang Sun. "Evaluating corporate social responsibility of airlines using entropy
weight and grey relation analysis." Journal of Air Transport Management 42 (2015): 55-62.

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 Optimization – This involves engaging all necessary stakeholders in the carbon
management process and reducing carbon dioxide emissions as far as possible.
 Reduction – In this phase, actual plans to reduce carbon footprint are implemented.
 Neutrality – Offsetting of any remaining carbon dioxide emissions as far as the airport
operators are concerned.
 Emission management – This involves monitoring, reporting and Verification or
MRV and EU Emissions Trading. It also involves updating the latest developments in
international carbon reduction regulations15.
 Automated carbon emission management – The establishment of such a system would
reduce the costs related to carbon emission management.
 Tools and techniques – The company plans to introduce a series risk identification
tools and methods which would improve management efficiency by training
employees and raising awareness.
 Continuous improvement – The policies at China Airlines are continuous and would
involve updating the fleets and the equipment used in airplanes. Moreover, it also
involves planning and implementation of carbon reduction measures.
 Market trends – The company conducts thorough market research on the recent
fluctuations in carbon reduction trends in the market and updates its policies
accordingly.
Climate change
The climate change policies of China Airlines are as follows:
 Using state of the art technology in order to reduce impact on global climate.
 Using lightweight material to reduce the overall weight of aircrafts.
15 Huisingh, Donald, Zhihua Zhang, John C. Moore, Qi Qiao, and Qi Li. "Recent advances in carbon emissions
reduction: policies, technologies, monitoring, assessment and modeling." Journal of Cleaner Production 103
(2015): 1-12.

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 Utilization of alternative sources of energy.
 Effective and proper operations which would conserve energy and reduce wastage.
 Improvement of flight operation procedures.
 Fuel efficient management through route planning and other measures
 Improving air traffic efficiency and airport infrastructure
Fuel efficient operations
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.
Theories of Corporate Social Responsibility: Stakeholder theory
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 to16.
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
16 Jones, Thomas M., Andrew C. Wicks, and R. Edward Freeman. "Stakeholder theory: The state of the art." The
Blackwell guide to business ethics (2017): 17-37.

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the claim that the stakeholders have on the firms. Power refers to the ability of the
stakeholders to influence the firm17. The eight types of stakeholders are as follows:
 Dormant stakeholders who have the power and ability to impose their interest through
coercive means.
 Dominant stakeholders are people who are the main stakeholders within an
organization.
 Discretionary stakeholders who are associated with corporate philanthropy.
 Demanding stakeholders who have urgent claims yet no legitimate power.
 Dependent stakeholders are ones who are dependent on other people to execute their
will.
 Dangerous stakeholders are powerful individuals who can be potentially coercive and
even violent.
 Definitive stakeholders are expectant stakeholders who gain relevant missing
attributes and emerge as important individuals with greater claim.
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 them18.
17 Tashman, Pete, and Jonathan Raelin. "Who and what really matters to the firm: Moving stakeholder salience
beyond managerial perceptions." Business Ethics Quarterly 23, no. 4 (2013): 591-616.
18 Brown, Jill A., and William R. Forster. "CSR and stakeholder theory: A tale of Adam Smith." Journal of
business ethics 112, no. 2 (2013): 301-312.