Major Japanese airline to reflect CO2 cuts in execs’ pay

The Yomiuri Shimbun

12:55 JST, June 26, 2022

Japan Airlines Co. is to start taking the company’s carbon dioxide emission cuts into consideration when calculating executives’ pay.

JAL will introduce the system from fiscal 2025 based on the amount of emissions achieved during the three-year period from fiscal 2022. The aim is to raise awareness of environmental issues among upper management.

Presently, the calculation method for performance-based stock compensation, which accounts for 20% of executive compensation, is based primarily on the operating profit margin. Starting from fiscal 2022, however, CO2 reductions and the status of the environmental, social and corporate governance (ESG) initiative will also be taken into account.

Decarbonization efforts have spread throughout the airline industry. If Japanese airlines are slow to take related action, it is feared that passengers — particularly in Europe, where environmental awareness is high — could shy away from using their services.

JAL has set a goal of reducing CO2 emissions to net zero by 2050. It also has advanced its efforts to procure next-generation fuel and replace its fleet with more environmentally friendly aircraft.

ANA Holdings Inc. introduced a similar compensation system from fiscal 2020.