In 2014, LATAM Airlines Group was able to report progress on sustainability management and compliance with the targets it had established.
In 2014, LATAM Airlines Group was able to report progress on sustainability management and compliance with the targets it had established. It is engaged in an ongoing process which is laying the foundations for the implementation of a new strategy that, as well as leveraging its business objectives, creates value for all its stakeholders.
The materiality process carried out in 2013 to map and define the business's most important economic, social and environmental issues and impacts played a crucial role in the design of the Corporate Sustainability Strategy 2015-2018.
This strategy reflects LATAM's quest to endure over time and represents a broader vision of the business under which the creation of value is not only a matter of the economic performance required by shareholders, investors and internal stakeholders but also incorporates suppliers, the community, customers and the environment. This integrated vision of how the business should be managed also incorporates the history and particular characteristics of LAN and TAM.
2015 will bring the challenge of launching and implementing the programs, activities and targets related to this strategy, laying the foundations for its continuity over the coming years
2015 will bring the challenge of launching and implementing the programs, activities and targets related to this strategy, laying the foundations for its continuity over the coming years and supporting LATAM's objective of becoming one of the world's three best airlines whilst always maintaining good relations and constant dialogue with all its stakeholders.
The aim is not only to generate direct benefits for LATAM but also to benefit the stakeholders with which it has ties through management that seeks to mitigate its social and environmental risks, conserve the region's tourism value, fulfill the expectations of customers and collaborators, facilitate access to the world's most responsible investment funds and contribute to the Company's aim of being the airline industry leader in the Dow Jones Sustainability Index.
One of the principal achievements of 2014 was LATAM Airlines Group's incorporation into the Dow Jones World Sustainability Index as the first airline group of the Americas to join this select group of companies.
The most important of the different initiatives implemented in 2014 under LATAM's Sustainability Strategy are set out below.
The most important of the different initiatives implemented in 2014 under LATAM's Sustainability Strategy are set out below. The Strategy comprises three key dimensions designed to help ensure that LATAM Airlines Group becomes ever more sustainable:
Through its work on these three pillars, LATAM Airlines Group strives to improve the balance and interaction between economic, social and environmental dimensions in a quest to achieve economic growth, manage environmental impacts and contribute to social progress. This is the imperative that LATAM has established to define its success in the societies in which it operates.
We define governance as the system that mobilizes and monitors sustainability and integrates it into the business, involving all our value chain.
The most important dimension of managing a company is its decision-making structure and this is even more the case when seeking to move beyond the traditional business sphere and become an organization that makes a profound contribution to sustainable development. This is why, at LATAM Airlines Group, we are committed, starting with our leaders, to what was reflected in the recognition received by Enrique Cueto in 2014 as “General Manager Leader on Sustainability" from the Sustainable Leaders Agenda 2020 (ALAS20).
In the framework of governance for sustainability, we have adopted the value chain vision and, as a result, management with our customers and suppliers is key.
The provision of a service of excellence and an experience differentiated by client is a fundamental element for the success of LATAM Airlines Group's businesses in both the passenger and cargo segments. We seek to optimize our processes based on a culture of continuous improvement, working to gain customer trust and loyalty, from the planning stage, flight options and check-in through to completion of the journey or delivery of the goods transported.
In order to improve its services before and during flights, LATAM Airlines Group invested US$100 million in technology projects in 2014.
In order to improve its services before and during flights, LATAM Airlines Group invested US$100 million in technology projects in 2014. We are working to transform the traditional travel experience into an experience that is agile and rapid, with shorter waiting times at the airport, less time between connecting flights, more in-flight entertainment options and greater information in the case of a contingency.
The important advances achieved include the development of applications for smartphones through which customers can manage all the variables of their journey, including an electronic boarding card, from their phone. In the case of their flight experience, access to LAN and TAM Entertainment, a wireless entertainment system for personal devices, also offers passengers a greater range of options, allowing them to see films, TV series and videos on their own smartphones, tablets or laptops. In addition, they can access YouTube, with the best selection of content from its most popular channels.
In the cargo business, an investment plan in systems for digital solutions for LAN and TAM clients was also implemented, representing an outlay of US$25 million.
In 2014, progress was also achieved in client management and relations through customer services, with the implementation of a unified LAN and TAM system.
In 2014, progress was also achieved in client management and relations through customer services, with the implementation of a unified LAN and TAM system. All contacts are registered and analyzed so that customers receive a solution and personalized response.
All these initiatives make a direct contribution to the sustainability of the business and to fulfillment of clients' expectations. However, LATAM is committed to further deepening of measures for clients that boost the contribution to sustainable development.
In the case of our suppliers, the definition in 2014 of LATAM Airlines Group's Corporate Procurement Policy, aligning the policies of two institutions that were until recently independent and simplifying their processes, marked a milestone in relations with these stakeholders. This Policy, a copy of which was provided to all Procurement area employees, defines the sustainability principles which LATAM wants to see prevail throughout its value chain, highlighting aspects such as protection of human rights, anti-corruption practices, working conditions and socio-environmental responsibility. In addition, it establishes procedures for tenders and the standard price for different categories of suppliers.
LATAM Airlines Group is also working on a pilot for the socio-environmental profiling and evaluation of suppliers and a plan of work has already been defined.
LATAM Airlines Group is also working on a pilot for the socio-environmental profiling and evaluation of suppliers and a plan of work has already been defined. The initial approach was based on identification of the risks inherent to the business and this will be developed using a risk matrix with four dimensions: restoration, mobilization, information technology (IT) services and safety. This initiative is an example of the work that LATAM undertakes through its Procurement and Supply Chain Vice-Presidency which constantly monitors aspects that can be considered critical such as equipment maintenance, back-up systems, overtime or health and safety at food suppliers.
Finally, since local development is an important aspect of LATAM's strategy, investment in companies in the countries where we operate is key. We, therefore, give priority to hiring local companies or the local subsidiaries of international companies in order to serve as an active partner in local economic development.
The United Nations Framework Convention on Climate Change (UNFCCC) defines this phenomenon as a change in the climate that alters the world's atmosphere.
The United Nations Framework Convention on Climate Change (UNFCCC) defines this phenomenon as a change in the climate that alters the world's atmosphere, causing significant harmful effects to the composition, resilience or productivity of natural ecosystems. The key objective in order to combat climate change is to stabilize and control greenhouse gas emissions.
LATAM Airlines Group is aware of the impacts generated by the airline industry (which is responsible for 2% of the greenhouse gas emissions that can be attributed to human activity) and strives to be a world leader in this field, thereby also contributing to LATAM's efficiency and competitiveness.
LATAM's principal environmental impacts take the form of the CO2 emissions, noise and waste generated by its flight and ground operations. It seeks to minimize these impacts through a range of specific programs and initiatives such as the implementation of an Environmental Management System, the reduction of its carbon footprint, increased use of alternative sustainable energies, the minimization of the waste generated and eco-efficiency.
LATAM Airlines Group's Environmental Management System, which is aligned with ISO 14001 requirements for ground operations and the Environmental Assessment (IEnvA) system developed jointly with IATA for flight operations.
LATAM Airlines Group's Environmental Management System, which is aligned with ISO 14001 requirements for ground operations and the Environmental Assessment (IEnvA) system developed jointly with IATA for flight operations, establishes controls on significant environmental aspects, efficiency programs, the optimization of processes and the management of risks related to the operation's emissions.
Most of our greenhouse gas emissions are a result of the burning of fuel, making efficiency gains, consumption reductions and good management key in this field.
In this context, LATAM implements eco-efficiency measures and strives for continuous improvement through, for example, the acquisition of modern aircraft with latest-generation engines and the adoption of efficiency criteria that imply environmental improvements in decisions relating to the fleet, including the acquisition of aircraft and their operation and maintenance. The LEAN Fuel and Smart Fuel Programs have implemented at least 20 initiatives, including important investments in fleet renewal, efficiency gains in routes and flight times thanks to the use of new technologies such as the Required Navigation Performance (RNP) system, the use of platforms for partial disembarkation, control of air conditioning, optimization of the cargo capacity of passenger and cargo services through the development of innovations that reduce on-board weight and the update and washing of engines. The results speak for themselves in that, in 2014, LATAM Airlines Group was able to reduce its CO2 emissions by 298,184 tons.
Another fundamental aspect of eco-efficiency has to do with the conditions in which the fleet operates. Constant maintenance and fleet renewal are, therefore, key.
Another fundamental aspect of eco-efficiency has to do with the conditions in which the fleet operates. Constant maintenance and fleet renewal are, therefore, key. In line with this, LATAM updates, replaces and washes engines as a preventive strategy, allowing it to increase the efficiency of fuel consumption and reduce the impact on the environment. In addition, as part of its strategy of leadership, LATAM strives to have one of the industry's youngest fleets and currently has 327 aircraft with an average age of less than seven years.
Our efforts to control and minimize impacts were also reflected in LATAM's flights in Brazil for the Football World Cup. These flights to the 12 cities that hosted matches compensated for 100% of their greenhouse gas emissions, equivalent to a total of 100,000 tonnes corresponding to over 4,500 flights. The projects associated to Premium carbon credits offer important benefits for communitires involved, such as diodiversity preservations, social inclusion, cultural stimulation and health.
As a way of reducing its carbon footprint, the air transport industry attaches great importance to the development of demand for and use of more efficient alternative energies with less impact on the environment. As a company, we adhere to these efforts and are involved in research to promote the use of second-generation biofuels by aircraft and were the first in South America to carry out flights using this technology.
One of the key aims of LATAM Airlines Group and of the industry is to achieve carbon-neutral growth by 2020.
One of the key aims of LATAM Airlines Group and of the industry is to achieve carbon-neutral growth by 2020. In line with this, 2014 was the third consecutive year in which LAN Perú compensated for its ground operations by contributing to reforestation of the Peruvian Amazon in collaboration with the Bosques Amazónicos company (BAM). Similarly, LAN Colombia compensated for its ground emissions by acquiring carbon credits from an emblematic project to reduce emissions caused by deforestation and forest degradation (REDD) in the Chocó Darién conservation corridor. This project has obtained gold certification under the Climate, Community, and Biodiversity (CCB) standard and, moreover, uses 35% of the revenues obtained from the sale of credits in community development projects.
The most important impacts of the airline industry's operations also include noise and air quality. LATAM Airlines Group permanently controls these aspects and implements different measures to manage and reduce the noise it generates by, for example, investing in more modern and silent engines and the use of only one engine for hangar and airport operations (one-engine taxi).
In the coming years, the strategic challenge for LATAM Airlines Group as regards environmental sustainability will be to achieve full implementation of its Environmental Management System in 100% of its operations.
Corporate citizenship is the framework in which we understand our performance vis-à-vis society and within which we contribute to social progress. This involves both communities in the places where we operate and our collaborators.
In this area, 2014 was an important year due to the implementation of the LATAM culture and its communication to all our employees. Under this culture, LATAM Airlines Group seeks and brings together people who share the key value of Passion which is, in turn, reflected in the values that guide our behavior - Passion for safety, Passion for the customer, Passion for the team and Passion for excellence.
Our aim is for LATAM Airlines Group's 53,072 collaborators to achieve their best performance, be committed and, above all, geared to the customer and able to develop and grow in the organization. To this end, LATAM seeks to ensure that all its collaborators are familiar with and aligned with the company's objectives, working in a way that is efficient and agile, with clear roles and in a coordinated manner.
The benefits we offer collaborators include life insurance, health insurance, a pension fund, child care assistance and coverage for persons with disabilities.
In the case of employee training, we have focused on achieving a complete learning experience.
In the case of employee training, we have focused on achieving a complete learning experience. In 2014, we invested US$39,157 in internal training, offering 1,910,367 hours of training, and US$430,652 in the provision of 150 scholarships for our collaborators.
Employee health and safety is a key issue for the aviation industry and LATAM Airlines Group, therefore, gives priority to maintaining the lowest accident rates. For this purpose, we use management tools that range from behavioral aspects to physical safety, eliminating potential risks through rules and procedures.
Since LATAM operates in numerous countries in the region, its impacts are broad in scope. As part of our community relations, we have, therefore, defined a strategy that includes sustainable tourism and social investment.
Our principal responsibility is to foster sustainable development together with our stakeholders in the different countries where we operate.
Our principal responsibility is to foster sustainable development together with our stakeholders in the different countries where we operate since our main impact in the region is the connectivity we provide. We seek to position ourselves as leaders in sustainability in the region and as promoters of sustainable tourism as one of the keys to its development. For our work in this area, we have defined four pillars whose transversal axis is the integration of stakeholders' efforts.
In the case of sustainable tourism, we once again implemented the Cuido mi destino (I look after my destination) program in Argentina, Chile, Colombia, Ecuador and Peru in 2014, completing five years since the launch of this initiative. Under this program, students and members of the community work together to restore public spaces with tourism value, such as the monuments and/or important buildings of each city. Students and local authorities are also able to attend talks about tourism awareness, the environment and local culture, helping to foster responsible tourism and promote Latin America's historical and cultural heritage. Since its creation in 2009, this program has been implemented in 21 cities across Latin America, with the participation of over 2,600 students along with volunteers from LATAM Airlines Group.
In the case of social investment, we have focused on the contribution that, as a company, we can make to non-government organizations that, through their work, seek to foster the region's development, combating poverty and promoting conservation of the environment, citizen participation and protection of human rights. We support these organizations by transporting volunteers or making direct donations. The organizations we support include Un Techo para Mi País, América Solidaria, Coaniquem, María Ayuda, Corporación la Esperanza, UNICEF, Make-a-Wish, Childhood, Fundación Amazonia Sustentable and Central Nacional de Trasplantes.
Through the relations it maintains with government bodies and sector entities in the different markets where it operates, LATAM Airlines Group has an active voice on matters that directly or indirectly affect its business strategy
Over time, we have sought to strengthen our participation in bodies that represent the airline industry. At the global level, we act through IATA, which is a key vehicle for the exchange of information about new technologies, operational safety and the sector’s current and future challenges.
At the regional level, we also participate in the Latin American and Caribbean Air Transport Association (ALTA).Always defending transparent dialogue, we seek joint solutions with a focus on efficiency and profitability. LATAM has teams responsible for monitoring and participating in such debates.
Given LATAM’s process of integration, we face the challenge of acting in an integrated manner in our relations with political and sector agents in different places such as Chile, Peru, Argentina and Brazil, taking into account the different situations prevailing in these countries.
In Chile and other markets, we also work with governments to study routes and flights that can generate tourism, employment and earnings for places where we did not previously operate.
In Chile and other markets, we also work with governments to study routes and flights that can generate tourism, employment and earnings for places where we did not previously operate.
In order to ensure proper relations with government representatives and associations, we use LATAM’s codes of conduct as reference. In addition, as part of our compliance program, we are implementing a calendar of training on governance and ethics.