Japan Airlines Receives Transition-Linked Loan In Partnership With JBIC

Japan Airlines sales and distribution channels that support the flow of people and the Japan Bank for International Cooperation are working together to support efforts to reach net-zero carbon emissions by 2050.

On March 1, 2023, Executive President and Representative Director of Japan Airlines Co. Ltd., Hayashi Nobumitsu, stated that JAL and the Governor of Japan Bank for International Cooperation (JBIC), Akasaka Yuji, had accomplished the country’s first ‘Transition-Linked Loans’ with a particular proceeds usage of a guaranteed loan from borrower JBIC.

AKASAKA Yuji, and HAYASHI Nobumitsu
© Japan Times | Nippon.com

By focusing on “solving social issues and creating sustainable flows of people, as well as sales and distribution channels,” JAL has positioned Environmental, Social and Governance (ESG) strategies as its medium to long-term growth strategy. One of the most pressing issues in the aviation industry is lowering aircraft CO2 emissions. By 2050, JAL intends to have virtually no CO2 emissions at all, and the airline will continue to promote initiatives like switching to fuel-efficient aircraft, enhancing daily flight operations, and using Sustainable Aviation Fuel (SAF).

Under its Medium-Term Business Strategy, “JBIC will address global concerns towards accomplishing sustainable development for the world economy and society.” JBIC offers financial assistance to private companies taking steps to address climate change to achieve sustainable development and growth that strikes a balance between the economy, society, and the environment.

Summary Of The Guaranteed Loan

With this loan from JBIC, JAL will introduce fuel-efficient equipment. The two companies will work together to steadily advance efforts to meet JAL’s net zero CO2 emissions objective by 2050.

Summary of the Guaranteed Loan
© Japan Airlines

What Is A Transition-Linked Loan?

A sort of financing known as a ‘Transition-Linked Loan’ enables firms that borrow money to take action to reduce their CO2 emissions in line with their long-term strategy. The borrower businesses also establish goals that are consistent with the strategy, and the financial details of the loan may change depending on whether or not the goals are achieved. By establishing Sustainability Performance Goals (SPTs) for reducing CO2 emissions in FY 2025 and FY 2030 during the loan period, JAL has committed to attaining net zero CO2 emissions by 2050.

Transition Loan And Transition-Linked Loan Framework

About its assessment of the framework’s alignment with pertinent principles and a third-party opinion that the framework is in line with the Sustainability Linked Loan Principles. The ‘Transition Loan and Transition-Linked Loan Framework ‘ that JAL has recently developed has received the highest rating, Green 1 (T) (F), from the external reviewer Japan Credit Rating Agency, Ltd. The project received the METI “FY2022 subsidy for global warming countermeasures promotion project” grant.

Framework Evaluation
© Japan Credit Rating Agency

By implementing finance using both this framework and the ‘Transition Bond Framework,’ which was developed in February 2022, JAL will continue to actively upgrade to the most modern and fuel-efficient aircraft and accelerate its transition and efforts towards eventual decarbonization in the air transportation business. JBIC will also keep up its active support of private businesses like JAL that are pursuing decarbonization efforts by advancing global sustainability and tackling global problems to promote sustainable growth for the world’s economy and society.

Use Of Proceeds From Guaranteed Loan

With the funds from this loan, JAL will buy two A350-900 planes that are economical with fuel. JAL will continue to use this framework after the year 2023 to finance both new and current investments connected to upgrading to fuel-efficient aircraft, as indicated in the ‘CO2 Reduction Goals and Actions by 2030’ (the A350 and 787).

Steadily promote renewal of flagship fleet
© Japan Airlines
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Samuel Ayobami Ojerinola
Samuel Ayobami Ojerinola
Aviation Reporter - With a deep background in travel including previous work for LoveHolidays, Omega and HRG, Samuel contributes news and analysis here at Travel Radar. Samuel also holds a BA degree in Travel & Tourism Management from the University of West London.