Aircraft and Ships

Our Approach to Our Sustainability Themes

Aircraft Business

• Recognizing the strong social demand for reduced CO₂ emissions in the airline industry, we will provide supplementary support for meeting the emission reduction targets of airline companies as an operating lease provider. We therefore aim to increase the ratio of new models with good fuel efficiency in our aircraft portfolio.
• We will consider investments and loans related to sustainable aviation fuel (SAF).

Ship Business

• ORIX bases vessel ownership on specifications that improve fuel efficiency and reduce environmental impact. We have implemented a policy to exclusively procure new ships that comply with international environmental regulations, and we will not invest in ships built prior to the international environmental regulations^* that went into effect in 2013.
• We will increase sustainability linked loans.

• Fuel efficiency regulations for new ships.

Business Activities and Sustainability Themes Matrix

Environmental consciousness in our aircraft operating leases

• #Climate change / Reducing GHG emissions

ORIX Aviation Systems Limited—a wholly owned subsidiary of ORIX—manages 139 aircraft through asset management services in addition to its own fleet of 50 aircraft. Avolon Holdings Limited (Avolon), a company in which ORIX has 30% ownership stake, has ordered 258 aircraft in addition to its own 527 strong fleet (data as of end of December 2022).
Societal demand on the aviation industry to reduce CO₂ emissions is significant, and the entire industry has been formulating reduction targets and action plans to achieve these targets. Many airlines are also implementing measures such as setting preemptive reduction targets. In October 2021, the International Air Transport Association (IATA) adopted a goal of net-zero carbon emissions by 2050. In 2016, the International Civil Aviation Organization (ICAO) resolved to introduce a scheme that stipulates the obligation to set CO₂ emissions allowances for 193 countries. As of 2021, the scheme is in operation in 88 countries. In 2027, airlines in all member states will be required to purchase CO₂ emissions offsets in the form of carbon credits.
Serving as an operating lease company, ORIX believes it is essential to increase the percentage of its fleet of new fuel-efficient aircraft models to complement the airline's emissions reduction targets. In addition, we recognize accelerating promoting the use of alternative fuel SAF (Sustainable Aviation Fuel: aviation fuel made from raw materials other than fossil fuels) is a crucial theme for reducing emissions.
As of December 2022, 55% of Avolon's fleet was comprised of new models, and one of its goals is to increase this to 75% by 2025. All of the 258 aircraft on order are new models. In June 2021, Avolon placed an order for up to 500 electric vertical takeoff and landing aircraft (eVTOL)^* for a total investment valued at 2 billion USD. Avolon is aiming to reduce CO₂ emissions from its own operations (such as in offices or from business travel) with the goal of achieving net zero emissions by 2025. Avolon is also working to reduce emissions from leased aircraft by replacing the fleet with newer models.
Details regarding Avolon's various initiatives can be found in its Sustainability Report 2022.

• A motorized aircraft that takes off and lands vertically and has the characteristics of a helicopter, drone, and small airplane. It does not require a runway and is characterized by low noise. It does not emit greenhouse gases when driven, and its maintenance costs are lower than those of helicopters. It is expected to have a variety of uses, including logistics, short-distance passenger transport, medium- to long-distance travel, and emergency transportation.

Environmental considerations in ship investment (ownership and operation)

• #Climate change / Reducing GHG emissions
• #Biodiversity / Environmental conservation

As of March 2023, ORIX possesses 10 bulkers in its fleet.
There are concerns about the environmental impact of ship operations, such as CO₂ emissions from fuel use and the impact of ballast water^* on marine ecosystems. All of the ships ORIX owns or has ordered were built in Japan to specifications for low fuel consumption and our basic policy is to use low-friction resistance paint on ship bottoms and add-on equipment to improve propulsion efficiency of propellers in an effort to improve fuel efficiency and reduce environmental impact.
The vessels owned and on order are equipped with ballast water treatment systems while state-of-the-art eco-ships make up the bulk of the fleet. Future shipbuilding orders will be for vessels that comply with international regulations effective from 2025, requiring vessels manufactured from 2025 onward to emit 30% less CO₂ than the baseline, which includes one newly built vessel that has already been ordered.

• Ballast water is water that is loaded as weight to stabilize an empty vessel. Since ballast water is loaded after cargo is unloaded and then discharged when cargo is loaded at another port, there is concern that ballast water may bring in invasive alien species and affect the marine ecosystem. For this reason, the International Maritime Organization (IMO) has adopted and put into effect the Ballast Water Management Convention, which stipulates the proper treatment of ballast water, making it mandatory for ocean-going vessels covered by the Convention to be equipped with ballast water treatment equipment.

Ship finance (sustainability linked loans)

• #Climate change / Reducing GHG emissions

ORIX's Ship Finance business offers a sustainability linked loan. This loan is based on the annual CO₂ emissions of the ship to be financed, and if the annual CO₂ emissions of the ship are less than the standard value after the loan is disbursed, the interest rate for the following year will be preferentially applied. CO₂ emissions are calculated by the Nippon Kaiji Kyokai (ClassNK) to ensure objectivity and fairness. Through this loan, we are contributing to the decarbonization of the shipping industry from a financial perspective.

Managing the health of seafarers and reducing food loss

• #Promoting a circular economy
• #Safe working environment

ORIX has installed specialized equipment to keep food fresh on its vessels—as of March 2023, two have already been installed. A well-balanced diet is essential for the health and wellbeing of seafarers on long voyages; however, perishable foods such as fruits and vegetables are difficult to keep for long periods of time, which can lead to spoilage. As a result, unbalanced meal content and loss of foodstuffs loaded on board have been issues in ship operations. By installing equipment, we have been able to improve working environments and reduce food loss in consideration of the health of ship crew.