The global push for sustainability is accelerating and the aviation industry is undergoing pressure to improve how it tracks and reports carbon emissions. While Europe has recently eased some formal sustainability disclosure requirements, the call for transparency remains strong – particularly for aircraft lessors, financial institutions and supply chain partners. Carbon tracking is becoming a central part of business strategy – not only for compliance, but also for maintaining asset value and investor confidence.
In Europe, the regulatory landscape has shifted significantly with the introduction of the EU’s Omnibus Package. With approximately 80 per cent of companies now finding themselves exempt from CSRD reporting obligations and reporting deadlines for the remainder extended to 2028, it might appear that regulatory pressure is easing. Despite the perceived rollback, the reality for many firms – particularly those in financing or operating aircraft – the demand for accurate emissions data remains strong. Investors, insurers and banks are increasingly integrating carbon data into their risk assessments and investment strategies, keeping the pressure firmly on.
At the same time, the EU Emissions Trading System (EU ETS) continues to drive emissions accountability. Under the scheme, operators flying within the European Economic Area must monitor and potentially pay for their CO2 output through the purchase of carbon allowances. As carbon prices rise, inefficient aircraft are becoming more costly to operate, making emissions management not only an environmental obligation but also a financial concern. This, in turn, is influencing aircraft valuation: more fuel-efficient models with lower emissions are seen as more desirable assets, both for their reduced compliance costs and for their long-term lease-ability across economic cycles. Although they may not have to report emissions under CSRD, lessors are increasingly factoring emissions performance into portfolio strategies. In a market moving swiftly towards Net Zero, carbon-intensive aircrafts will increasingly face valuation risks.
In contrast, several Asian countries are heading in the opposite direction when it comes to ESG disclosure obligations. Singapore’s financial regulator is actively supporting greener aviation initiatives, while Japanese lessors are aligning with international frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD). China is pursuing its dual carbon goals – peaking emissions by 2030 and achieving neutrality by 2060 – by developing its Corporate Sustainability Disclosure Standards (CSDS) framework – a national corporate sustainability reporting standard. Hong Kong, meanwhile, continues to refine its climate disclosure regime as it promotes green finance through its Green and Sustainable Finance Steering Group.
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Early adopters of sustainability practices had been positioning themselves advantageously by focusing on modern, fuel-efficient fleets and improving emissions performance. Aligning with carriers that prioritise greener operations can unlock access to financing, foster long-term partnerships, and enhance long term competitive advantage. However, the current unprecedented demand for aircraft, combined with a constrained global supply is slowing the retirement of older, less efficient jets, thereby reducing this strategic advantage. Nevertheless, as the industry becomes increasingly shaped by carbon reduction goals and the ripple effects of geopolitical tensions on global economy and demand, it is likely that alignment to sustainability will offer a more resilient longer-term path forward.
Despite European reporting obligations having been scaled back, the financial burden imposed by the EU ETS, combined with growing disclosure demands across Asia, the strategic importance of accurate carbon tracking. For airlines, lessors and financiers alike, emissions data has become more than a compliance issue, it’s a strategic one – it is central to cost management, asset preservation and competitiveness in the future low-carbon economy.
Yet for many in the industry, emissions tracking remains a logistical challenge. Manual processes and basic spreadsheets are still commonplace, despite being inefficient and prone to error. Since 2022, digital platforms such as PACE have offered a more scalable alternative. Now in its fourth year, PACE provides third-party emissions data by integrating flight activity with airline-specific passenger and cargo loads. Using a proprietary emissions model, it delivers accurate and actionable insights.
PACE covers more than 99 per cent of global commercial flights and aligns with industry-standard methodologies. It calculates fuel burn, CO2 output, and emissions intensity, and its partnerships with data providers such as CH Aviation, Ishka and Impact enhance both accuracy and relevance. For banks and lessors, platforms like PACE are enabling the development of sustainability-linked financial products and helping firms align their portfolios with evolving market expectations.
While Europe’s regulatory focus is evolving, the continued enforcement of the EU ETS ensures that emissions accountability remains firmly embedded in policy. At the same time, Asia’s more stringent ESG frameworks are reshaping expectations across the region. Together, these trends highlight a clear global direction: irrespective of regulatory compulsion, the pressure to disclose and manage aviation emissions is intensifying.
For industry players, the path forward lies in automation and data-driven insight. Tools like Pace not only reduce the data burden but provide the clarity needed to navigate a market increasingly driven by environmental considerations. In the evolving landscape of aviation finance, carbon data is no longer optional – it’s a cornerstone of long-term resilience.
