Goldman Sachs GS SUSTAIN: ESG of the Future Airlines Our analysis comprises 28 Airlines, globally, though highly skewed towards Americas. Our work encompasses 16 companies in Americas, 7 in Europe and 5 in Asia Pacific. We received GHG emissions estimates from our analysts for 15 of the 28 companies. We calculate GHG emissions intensities for the Airlines sectors dividing Scope 1+2 CO -eq emissions (in 2 tons) by revenue-passenger-kilometers (RPKs, in millions). This is in-line with our colleagues Carbonomics work. We see Scope 1+2 emissions intensities for the Airlines sector declining 5% by 2025E vs. 2019. Our estimates indicate only a slight reduction in emission intensities by the end of our forecast period (2025E) vs. base-year (2019) — see Exhibit 27 for more details. We note a 45% YoY increase in Scope 1+2 intensities in 2020 due to COVID-related disruptions and subsequent lower capacity factors for Airlines (our estimates indicate a 51% decline YoY in absolute Scope 1+2 emissions, while RPKs declined by 66%). Following a re-adjustment in 2021E (intensities down 24% YoY), our analysis indicates a slower pace in Scope 1+2 intensities decrease. At the end of the forecast period, we note absolute Scope 1+2 emissions and RPKs higher than pre-COVID levels (Exhibit 28). Why we believe this will matter for investors. We believe decarbonization efforts in the Airlines industry will be a key area of focus in coming years. As we heard during our Global Sustainability Forum, one of the main pathways to abate emissions in the sector is a mix shift towards higher utilization of Sustainable Aviation Fuel (SAF). As the panelists noted, wider adoption of SAF is still constrained by limited supply and high costs. The ability to limit higher costs pass through to customers as SAF adoption grows will be crucial to preserve cost-competitiveness and affordability, in our view. We also note opportunities in decarbonization of ground fleets, though with an impact secondary to SAF, in our view. Investment Implications. We see opportunities for greater recognition of Airlines companies that can successfully transition towards a higher mix of SAF vs. conventional fuels limiting pass through of higher input costs — or for those that can find credible sources of decarbonization alternatives (some airlines or related suppliers are partnering towards Direct Air Capture plants as an example). We note the Airlines sector is currently 35% underweight in ESG funds vs. respective benchmarks (sectors as defined under SUSTAIN classification, see Exhibit 18), highlighting room for further appreciation — particularly of transition stories — among ESG investors.