skip to content

Cambridge Institute for Sustainability Leadership

Climate risk in aviation

Since the release of the TCFD’s recommendations on climate-related financial disclosures in 2017, pricing climate-related risks into financial decision-making has become a key part of tackling climate change. To date, over 1340 companies with a market capitalisation of $12.6 trillion and financial institutions responsible for assets of $150 trillion have expressed their support for the climate-related financial disclosures.

Owing to its nearly exclusive dependence on fossil fuel-derived kerosene, the aviation sector faces increasing pressure to pursue a lower-carbon transition that is consistent with the Paris Agreement. This transition, which would involve drastic changes in current aircraft technology, climate mitigation policies, and market demand, could pose significant risks to the aviation industry. Additionally, airports and airlines also feel increasing material risks from the physical impacts of climate change, such as heatwaves, storms, and rising sea levels.

Despite its recognition of the importance of climate-related disclosures, the aviation sector is still developing its understanding of—and ability to assess—climate-related risks, particularly concerning how transition and physical risks interact with each other in climate-risk scenario analysis. The goal of this project is to explore the intersection of transition and physical sources of climate risks in climate scenarios that are developed specifically for the aviation sector.

Applications in practice

  • Future risk and opportunity
  • Measures, targets and disclosure
  • Business strategies and models

Contribution to CISL’s core research themes

Zero carbon


Protection of nature


About the project

Building upon existing TCFD-aligned methodological frameworks by NGFS, UNEP FI, and ClimateWise, this project is developing climate scenarios that integrate transition and physical sources of climate risks to the aviation sector. Through the application of both qualitative and quantitative research methods, the project will: provide a comprehensive database on all climate-related risks in aviation; explore the links between transition and physical risks, their material impacts to airports and airlines, and what actionable strategies can be adopted by the aviation sector to improve their climate risks management; and price climate-related risks in long-term investment decisions. Importantly, the project also has the potential to provide a repeatable, systematic, and transparent approach for climate scenario modelling that can be applied to other economic sectors in their climate risks analysis.    

Impact and relevance  

Climate-related financial disclosures as a key step to drive the greening of the international financial system are increasingly embodied in decision makings of central banks (e.g., Bank of England, Banque de France), MDBs (e.g., EBRD), and across economic sectors. Some governments, including the UK, have announced the introduction of fully mandatory TCFD-aligned disclosure in the coming years. Although the motivation behind mainstreaming climate-related risks into business activities is certainly clear, how to use scenario analysis to assess climate risks to the economy—particularly at industry level—remains largely underexplored. This project will offer one of the first in-depth sectoral-level climate scenario analyses that encompass both transition and physical sources of climate risks. By examining climate-related risks in the hard-to-decarbonise aviation sector, this project will not only support more efficient capital-allocation decisions for airports and airlines, but will also inform policy makers on key policy interventions that could help the aviation industry to fulfill net-zero transition, while simultaneously preparing them for increasing climate adaptation challenges.     


WP1: Mapping Climate Risks in Aviation

  • Undertake desk-based research to map all climate-related risks in aviation, providing a scientific-evidence based database.
  • Conduct an extensive review of climate science, social science, and transport economics literature on the most appropriate metrics to quantify the climate-related risks that are relevant to the aviation sector.
  • Output: a paper on ‘Mapping the Climate Risks in Aviation and Their Quantification Measures’.

WP2: Heathrow Case Study on Stakeholder Perspectives

  • Use a qualitative approach to comprehensively test the resilience of the UK’s aviation sector to climate-related risks identified from WP1. 
  • Undertake a case study that involves questionnaires and semi-structured interviews with stakeholders from airports, airlines, and aircraft manufacturers.
  • Output: an in-depth analysis to ascertain the financial exposures of the aviation industry to climate-related risks, including stakeholder views of climate risks, their plans for climate risk management, and identifying an approach for estimating the material impact of climate change.

WP3: Framework Development and Modelling

  • Develop a TCFD-aligned framework with aviation-specific climate scenarios that integrate transition and physical risks in aviation.
  • Model and test actionable strategy to help the aviation sector enhance its management of climate-related financial risks.
  • Output: a paper on key government interventions to support the UK’s aviation sector to fulfil its net-zero commitment and to implement adequate adaptation plans to minimise the physical impact of climate change.

Collaborators and funding

This work is supported by a philanthropic gift from Heathrow.


Dr Bojun Wang

The Prince of Wales Global Sustainability Fellowship in Climate Risk in Aviation, supported by Heathrow


“A net-zero carbon emission aviation by 2050 is a promise that the UK aviation sector collectively made to the public. Challenges to achieve this ambitious goal are immense, and one of the central pieces is to better understand the climate-related risks in aviation and to ensure the right information is available for airports and airlines to make long-term investment decisions on infrastructure and technology development.”

Dr Bojun Wang