Aerospace & Defence

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Current language: English
Entities in the Aerospace & Defence industry include manufacturers of commercial aircraft, aircraft parts, aerospace and defence products, as well as defence prime contractors. Commercial aircraft manufacturers represent approximately one quarter of industry revenue and sell mainly to commercial airlines and governments. Aerospace and defence parts manufacturers represent the largest segment of the industry by total revenue, selling primarily to governments. Both aerospace and defence manufacturers operate globally and serve a global customer base. Defence primes represent approximately one quarter of total industry revenue and manufacture products including military aircraft, space vehicles, missile systems, ammunition, small arms, naval ships, and other commercial and military vehicles. Their customers consist of various government agencies and related businesses with global operations. The defence prime category also includes firearms manufacturers that sell to law enforcement agencies, businesses, distributors, retailers and consumers. Important sustainability topics within the industry include the energy efficiency and emissions profile of products and management of manufacturing energy and waste.

Relevant Issues (7 of 26)

Why are some issues greyed out? The SASB Standards vary by industry based on the different sustainability-related risks and opportunities within an industry. The issues in grey were not identified during the standard-setting process as the most likely to be useful to investors, so they are not included in the Standard. Over time, as the ISSB continues to receive market feedback, some issues may be added or removed from the Standard. Each company determines which sustainability-related risks and opportunities are relevant to its business. The Standard is designed for the typical company in an industry, but individual companies may choose to report on different sustainability-related risks and opportunities based on their unique business model.

Disclosure Topics

What is the relationship between General Issue Category and Disclosure Topics? The General Issue Category is an industry-agnostic version of the Disclosure Topics that appear in each SASB Standard. Disclosure topics represent the industry-specific impacts of General Issue Categories. The industry-specific Disclosure Topics ensure each SASB Standard is tailored to the industry, while the General Issue Categories enable comparability across industries. For example, Health & Nutrition is a disclosure topic in the Non-Alcoholic Beverages industry, representing an industry-specific measure of the general issue of Customer Welfare. The issue of Customer Welfare, however, manifests as the Counterfeit Drugs disclosure topic in the Biotechnology & Pharmaceuticals industry.
General Issue Category
(Industry agnostic)

Disclosure Topics (Industry specific) for: Aerospace & Defence

Energy Management
  • Energy Management

    Energy is a critical input to aerospace and defence manufacturing processes. Purchased electricity is the largest share of the industry’s energy expenditures, followed by purchased fuels. The type of energy used, magnitude of consumption and energy management strategies depend on the type of products manufactured. An entity’s energy mix, including electricity generated on-site, grid-sourced electricity and alternative energy, may influence the cost and reliability of energy supply and, ultimately, affect the entity’s cost structure and regulatory risk.
Waste & Hazardous Materials Management
  • Hazardous Waste Management

    Aerospace and defence product manufacturing may generate hazardous process waste, which may include heavy metals and wastewater treatment sludge. Entities face regulatory and operational challenges in managing waste, since some wastes are subject to regulations pertaining to their transport, treatment, storage and disposal. Waste management strategies include reduced generation, effective treatment and disposal, and recycling and recovery, when possible. Such activities, although requiring initial investment or operating costs, may reduce an entity’s long-term cost structure and mitigate remediation liabilities or regulatory penalties.
Data Security
  • Data Security

    Entities in the Aerospace & Defence industry may develop sensitive military and advanced aviation products, and entities in this industry therefore may be at risk for cyber-attacks. A data security breach may be costly for an entity and its clients when information systems are compromised. Ensuring data security may require aerospace and defence entities to invest in research and development and increase capital expenditures in the short to medium term to improve the security of systems and products. Significant or frequent disruptions or security breaches may result in regulatory action, legal action, or adversely affect revenues and brand value.
Product Quality & Safety
  • Product Safety

    Product safety is an important consideration for aerospace and defence entities given the industry’s important role in commercial aviation and military operations. Product safety incidents could result in financial impacts, including increased costs, regulatory penalties or brand-value impacts that could affect market share adversely. Additionally, counterfeit components have been found in the aerospace and defence supply chain, increasing the risk of safety incidents because of low product quality. Through product design, supplier vetting and customer engagement involving maintenance and accident investigations, entities in this industry may ensure the safety of their products over the long term, mitigating potential financial consequences such as revenue loss because of repeated safety incidents or recalls.
Product Design & Lifecycle Management
  • Fuel Economy & Emissions in Use-phase

    Customer preferences and regulatory incentives are increasing the demand for energy-efficient and reduced-emissions products in the Aerospace & Defence industry. Many of the industry’s products are powered by fossil fuels and release greenhouse gases (GHGs) and other air emissions during use. As the designers and manufacturers of most of the global aerospace and defence transportation fleet, entities in this industry have a unique opportunity to support many industries and government agencies that are striving to meet GHG emissions and fuel-management goals and imperatives. Products with higher fuel economy and lower use-phase emissions may capture expanding market share and adapt to changing customer preferences and regulations around fuel economy and emissions more effectively.
Materials Sourcing & Efficiency
  • Materials Sourcing

    Aerospace and defence entities are exposed to supply chain risks when critical materials are used in products. Entities in the industry manufacture products using critical materials with few or no available substitutes, many of which are sourced from only a few countries that may be subject to geopolitical uncertainty. Entities in this industry also face increasing global demand for these materials from other sectors, which may result in price increases and supply risks. Entities that limit the use of critical materials by using alternatives and securing their supply may mitigate the financial impacts stemming from supply disruptions and volatile input prices.
Business Ethics
  • Business Ethics

    Aerospace and defence entities based in jurisdictions with stronger business ethics laws may be vulnerable to regulatory scrutiny of their business ethics because of operations and sales in regions with weaker government enforcement of business ethics laws. Entities in this industry have been found in violation of corruption and anti-bribery laws. Unethical practices may jeopardise future revenue growth and may result in significant legal costs and higher reputational risk. As such, strong governance practices may mitigate the risk of violating business ethics laws and resulting regulatory penalties or brand-value impacts.

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