Sustainability Report for an Airline

Organization Behavior

Sustainability Report for Lufthansa Airlines

Sustainability Report

Sustainability Report for Lufthansa Airlines

The purpose of this report is to analyze and discuss the sustainability practices and efforts of one of the leading airlines of the world -- Lufthansa Group. Every organization incorporates some sustainability practices that show its concern for the society it serves and the environment in which conducts its business (Bleischwitz & Hennicke 2004). Through this paper, an attempt has been made to discuss the key sustainability practices which Lufthansa Group has adopted for proving itself as a socially and environmentally sustainable organization. The paper starts with a brief introduction to the organization and then highlights its major sustainability efforts. The later sections discuss the two most important sustainability practices and give recommendations on how this organization can improve these practices in the light of business sustainability models.

LUFTHANSA AIRLINES

Lufthansa Group is one of the largest international air transportation companies of the world. It serves the customers from 149 nationalities with its 710 fleets and almost 117,000 employees. The daily average take-offs and landings are almost 2,790 times with more than 250,000 customers and 5,500 tons freight is transported from one place to another on daily basis (Lufthansa 2012). The airline services provided by Lufthansa Group give an astonishing flying experience to its customers; making it one the most preferred and reliable international airlines of the world.

The Group is engaged in five major segments in the same line of business; including passenger travel, logistics and carriers, maintenance and repair of air vehicles, catering, and Information Technology services to all kinds of companies in the aviation industry. Lufthansa Group has more than 400 associated companies and subsidiaries both from related and diverse business areas (Lufthansa 2012).

THE SUSTAINABILITY EFFORTS AND PRACTICES OF LUFTHANSA AIRLINES

The Five Pillars of Sustainability:

In addition to striving for a strong financial position and high market share, Lufthansa has also determined to make itself a socially responsible business entity that may only serve its worldwide customers with the highest standards of services, but also show an equal concern for its employees, investors, supply chain members, and the environment in which it operates. To fulfill this aim, Lufthansa has clearly defined a set of sustainability policies and practices that are implemented in all its business units and offices around the world. The corporate wide sustainability practices of Lufthansa Group are divided into five major areas. These are; economic sustainability, climate and environmental responsibility, social responsibility, corporate citizenship, and corporate governance & compliance (Lufthansa 2012).

1. Economic Sustainability:

Economic sustainability refers to the degree to which an organization makes efforts to compete in the industry on the basis of its financial and economic performance (Bleischwitz & Hennicke 2004). Lufthansa competes in such an industry where there is a high level of competition among top-notch competitors that are always in a quest to gain greater market share and profitability figures than other industry participants. Through economic sustainability practices, Lufthansa aims to make its financial position stronger by giving Value to its customers and increasing its brand loyalty. Other economic sustainability practices include effective risk management policies, supply chain management, total quality management, etc. (Lufthansa 2012).

2. Social Responsibility:

Lufthansa realizes the importance of social responsibility in its sustainability efforts. Social responsibility constitutes all those practices that create value for the employees of an organization and the community it serves. Therefore, Lufthansa has instituted some practices that are free from any profit maximization or business growth motives. The major social responsibility efforts that are currently under practice at Lufthansa include training and development, strong organizational culture, flexible work options and attractive growth opportunities for employees.

3. Climate and Environmental Responsibility:

A business must also show a deep concern for the environment in which it operates and makes growth of its business. Lufthansa has taken a number of steps to prove itself a responsible corporate entity in this aspect of sustainability. The Environmental Management Systems, Resource Management, climate protection measures, fleet modernization program, and the implementation of ecological construction techniques are some significant steps that have recently been taken by Lufthansa Group (Lufthansa 2012).

4. Corporate Governance and Compliance:

A sound Corporate Governance is essential to maintain the highest standards of business practices, safeguard the interests of stakeholders, and adhere to the Laws and Regulations that are set by the regulatory authorities from time to time. At Lufthansa, a strict Control is maintained over all its business policies and practices so that all the actions being taken in the normal course of business are transparent and free from any misrepresentation.

5. Corporate Citizenship:

Lufthansa has also taken some successful social endeavors at the Global level. Whenever the world has needed financial aid or social support, Lufthansa has always tried to stand in the row of great contributors. For corporate citizenship, Lufthansa takes parts in numerous social activities. For example; sponsoring sports, educational, and cultural events, raising funds for the countries that get affected by natural disasters and providing free air transportation to supply food to the affected people in those countries.

It is clear that Lufthansa is always active in contributing towards social welfare and implementing different environmental protection practices. All these practices help it to maintain a good public image and win the stakeholders' confidence. The following sections are dedicated to explain the two most admired sustainability efforts of Lufthansa Group in a comprehensive manner:

ENVIRONMENTAL Management SYSTEMS AND STANDARDS

Lufthansa has defined some Strategic Environmental Guidelines that provide a framework for the whole Group on the provision and implementation of the best business practices in all its operational areas and activities. All the business units of Lufthansa Group have defined their own procedures of environmental management. They have Environmental Departments that are headed by environmental commissioners who work in collaboration with other partners from the industry. Lufthansa Group also runs an internal Group-wide Environmental Forum through which all the Departmental Heads meet on periodical basis and discuss the major issues as well as the progress the Group has made on their environmental protection objectives (Lufthansa 2012).

Concentrated Environmental Competency:

The Environmental Management team performs its duties in the form of workgroups; each of these groups is dedicated with a specific set of responsibilities. For example, one workgroup is responsible to collect, analyze, and interpret the data on different environmental issues. Another group is responsible to compare and contrast the progress of each individual workgroup towards the achievement of organization wide goals. A third workgroup performs the function of compiling and summarizing all the activities and events of other workgroups and publishing them for future reference.

Environment and Climate Protection Measures:

Lufthansa has taken a number of steps to contribute in the climate protection objective. For example, it acts upon the principles of Total Quality Management in all its operational areas. It results in an efficient usage of resources and a decreased environmental pollution. Moreover, actions are taken to reduce the noise of aircrafts and make them more fuel efficient. Lufthansa also sends its aircraft engineers for training and development sessions so that they come up with the most advanced knowledge in the field of Information Technology, Aircrafts engineering, and Environmental Management (Lufthansa 2012).

Lufthansa Global Tele Sales (GTS):

Lufthansa Global Tele Sales (GTS); a subsidiary of Lufthansa Group has introduced an environmental management system that gives a full picture to the stakeholders of what Lufthansa has been doing for environmental protection. This system is approved by the European Eco-Audit Regulation EMAS and considered as one of the most effective procedures in the environmental protection objectives. The system entails the company's policies, mission, and objectives in the course of its environment and climate protection activities. It not only communicates these policies and objectives to the stakeholders of the company, but also gives them guidelines on how they can contribute in these activities and become a part of the environmental protection initiative (Lufthansa 2012).

CORPORATE ENVIRONMENTAL STRATEGY

Lufthansa Group has always tried to keep its costs of business at their lowest level, but without compromising on the quality of its services or facilities provided to the customers. The major focus has always been given on making the fleets more fuel efficient and advanced with each passing day. To achieve this aim, Lufthansa uses the most advanced technology in its aircrafts and maintains them in their best conditions. With the help of its fuel efficient business operations and modernized fleet, Lufthansa improved its Kerosene consumption efficiency by 2.4% as compared to the previous year. Other strategies to improve the fuel efficiency include; reduction in the weight of aircraft seats, flying at variable speeds, and using optimized routes for air journeys.

Safety Measures for Passengers:

Lufthansa has given strict instructions to its pilots to keep an effective check and balance for fuel dumps. This is to ensure that Lufthansa Group passengers do not face any type of risk when the pilots have to make emergency landings due to bad weather, technical problem, medical or other issues. Fuel dumps require a specific quantity of fuel to be dumped so that the weight of the aircraft reaches the required lowest point. Lufthansa does not compromise on saving money at the cost of giving a risky journey to its passengers (Lufthansa 2012).

Research and Development for Biofuel Testing:

Lufthansa gives a strong emphasis on the Research and Development section in the area of biofuel usage in future. Keeping in view the issues and challenges of fuel consumption, Lufthansa carefully analyzes the data obtained from various research studies and reports so that it can predict the future availability and consumption of this raw material (Lufthansa 2012).

The Pure Sky Program:

Under Pure Sky Program, Lufthansa makes efforts to make arrangements for alternative fuels for its aircrafts and machineries. Through this program, Lufthansa ensures that the whether the new alternative fuel sources are technically, economically, and environmentally feasible for its business or not.

Air Traffic Management as a part of Environmental Responsibility efforts:

The Air Traffic Management program aims to bring efficiency in the air traffic systems around the world. The major role in this program is played by the EU Commission and the European Air Traffic Control Authority that designs the methods and ways in which the air traffic can be made to fly in a well-organized way. The program authorities perform a number of functions for its success; including arrangement of finance, training and development of staff, and conducting research and surveys to gather industry data (Lufthansa 2012).

RECOMMENDATIONS IN THE LIGHT OF SUSTAINABLE Business MODELS

Although Lufthansa Group has taken various steps to prove itself as a socially and environmentally responsible corporate entity, but still there is big room for improvements in all its policies, procedures, and operational areas. The following paragraphs recommend a number of strategies or steps which Lufthansa Group can undertake in order to make its current environmental sustainability practices more efficient and effective than before. These recommendations are made in the light of two widely used sustainable business models; Natural Capitalism model and Value Proposition Model. These models give a framework to a business organization on how it can ensure a sustainable future in its industry by incorporating different environmental protection measures and practices.

The Value Proposition Model for Business Sustainability:

According to the Value Proposition Model, an organization is not there to make profits and grow in its industry; it must also show a deep concern for the society it serves and the environment in which operates. In the light of this model, it can be recommended that Lufthansa should first define what the key participants of the society are which must be taken care in order to strengthen the public image (International Institute for Environment and Development 2012).

Adhere to the Environmental Laws and Regulations:

The first and the foremost are the governmental bodies and regulatory authorities. Although Lufthansa has a proven track record of adhering to all the laws and regulations for business organizations, but it has not clearly defined the environmental protection laws in its Sustainability Report or other periodic publications. It is of utmost importance that Lufthansa includes these laws and regulations in its publications and communicates them to the employees and managers at all organizational levels (Kotler & Lee 2005). Moreover, it should include them in the annual reports so that other key stakeholders can also study the principles and practices which Lufthansa Group follows in the normal course of its business (Hond, Neergaard, & Bakker 2007).

Create Value for the Customers:

Secondly, Lufthansa Group can add value to the customers' flying experience and off-the-journey facilities by making the air transportation mechanism more convenient and efficient than before. As per the Value Proposition Model, Lufthansa Group can create value for its customers if it joins hands with those associated companies and subsidiaries that have a direct or indirect connection in the provision of its core services. These companies and subsidiaries can help it to serve its customers in a better and more effective manner (International Institute for Environment and Development 2012).

The Natural Capitalism model for Business Sustainability:

The second model is Natural Capitalism model which says that a business entity should also make its operations energy efficient so that they do not bring negative impacts for the external environment in which its business units operate, products are manufactured and distributed, or the services are rendered (Lovins & Garrison 2012). For Lufthansa Group, it can be recommended that it should increase the number of fleets per day so that every aircraft travels with fewer passengers. It will decrease the weight per aircraft; thus resulting in lesser fuel consumption. It can save its costs from unnecessary expenses that are incurred on customers on off-the-journey arrangements. These may include simple refreshments to the passengers that have to travel to nearer destinations instead of giving full meal treats.