Sustainability continues to gain traction in ADS companies in 2020, finds GlobalData
Sustainability is emerging as a key theme for the aerospace, defense and security (ADS) sector, with three times year-on-year (YoY) growth in mentions in 2020 compared to 2019. In 2021*, discussions around sustainability in earnings transcripts are already up by 9% compared to 2020, according to the Filing Analytics platform by GlobalData.
Rinaldo Pereira, Senior Business Fundamentals Analyst at GlobalData, comments: “ADS companies have faced financial stress due to COVID-19. Yet, companies seem determined to meet futuristic emission targets as is reflected in sustainability’s increasing mention in earning transcripts, with 2020 being decided as the start year towards carbon neutrality. There is an increased traction towards use of and development of alternative fuels (Airbus and Boeing) and futuristic designs (Airbus) to meet long-term goals despite a tough year.”
Pereira continues: “It remains to be seen if social sustainability issues in China influence the decisions made by ADS companies for the supply of rare earths. Mentions of ‘China Impact’ declined 2% in 2020 for ADS companies even as sustainability discussions grew multifold. It is likely that companies are at an impasse over choosing Chinese rare earth supply or a sustainable supply chain.”
As cashflow preservation came to the forefront in 2020 due to COVID-19, companies responded by pausing mergers and acquisitions (M&A) activity. Interestingly, discussions around M&A also rose YoY in 2021.
Pereira adds: “COVID-19 had varying effect on manufacturing in the ADS sector, and those affected will look for means to mitigate any future disruptions and whilst the path of recovery will differ based on region, sustainability will form an integral part of this.”