Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Developed baseline inventory of key environmental data
• Reduced atmospheric ozone inside aircraft through partnership with BASF

Social Achievements

• Launched AAR Public Diversity Statement
• Hired first all-female cohort of aircraft maintenance technicians
• Donated $500,000 to Smithsonian National Air & Space Museum
• Adopted “Rooney rule” for Board candidates
• Formed Board’s new Aviation Safety and Training Committee
• Set standard for safety with APRISe™ safety management system

Governance Achievements

• Adopted amended Corporate Governance Guidelines mandating diverse candidates in director searches
• Formed Board’s new Aviation Safety and Training Committee

Climate Goals & Targets

Environmental Challenges

• Data gaps in energy data
• Need to consistently report water and waste data across sites
• COVID-19 pandemic impact on social programs

Mitigation Strategies

• Used estimates based on standard energy inventory preparation practices and past performance for energy data
• Evaluating systems and processes to consistently report water and waste consumption
• Remaining committed to social programs despite pandemic challenges

Supply Chain Management

Supplier Audits: 50-100 suppliers annually

Responsible Procurement

• Supplier Code of Conduct

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI, SASB

Certifications: AS9100, AS9110, AS9120, Ten 14 CFR Part 145 certificated repair stations worldwide, FAA Diamond Certificate of Excellence for Safety Training of Aircraft Maintenance Technicians

UN Sustainable Development Goals

• Goal 12

AAR’s business model contributes to Goal 12 (Responsible Consumption and Production) by repairing equipment rather than discarding it, preventing and reducing waste.

Awards & Recognition

• Aviation Week Top 10 Airframe MROs
• Best Airframe MRO Provider – Worldwide
• Bloomberg Top 200 Federal Industry Leaders
• Boeing Performance Excellence Awards
• Defense News Top 100 Defense Contractors
• FAA Diamond
• Forbes America’s Best Midsize Employers
• Fortune 1000
• Military Friendly Employer
• Military Times Best for Vets Employers
• NSPA #1 Outstanding Source of Repair
• Top Shop
• Top 100 Aerospace & Defense Companies
• U.S. Veterans Magazine Top Veteran-Friendly Companies

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Energy use decreased 10% in FY2022 from FY2021, and 15% from FY2020.
• Emissions decreased 9% in FY2022 from FY2021, and 21% from FY2020.
• 92% (average) of the weight content of an aircraft is reused or recycled during teardown.
• Joint sustainability initiative with FTAI Aviation to help clients cut carbon emissions.

Social Achievements

• Expanded employee engagement with surveys, stay interviews, and Employee Appreciation Day.
• Launched four new employee resource groups.
• Added new training and direct-hire programs to enhance recruitment pipeline.
• Hired new Chief Ethics and Compliance Officer.
• Launched Supplier Diversity Program.

Governance Achievements

• Conducted ESG impact assessment and identified key areas of impact.
• Converted APRISe™ safety management system to first-ever corporate system approved by FAA.

Climate Goals & Targets

Environmental Challenges

• Data gaps in energy data requiring estimates based on standard energy inventory preparation practices and past performance.
• Need to consistently report water consumption volumes across sites.
• Need to consistently report waste data across sites.
• Limited manufacturing activities resulting in impact areas differing from typical manufacturing companies.

Mitigation Strategies

• Engaged an independent third-party consultant to assist with environmental data collection and reporting.
• Evaluating environmental inventory and developing strategies for managing impact.
• Developing strategies for managing water and waste impact.
• Implementing systems and processes for consistent reporting across sites.

Supply Chain Management

Supplier Audits: 50-100 suppliers annually

Responsible Procurement

• Supplier Code of Conduct covering worker treatment, HSE, environmental impact, data security, ethical business practices

Climate-Related Risks & Opportunities

Physical Risks

• Reduction in commercial flight hours due to weather disruptions

Transition Risks

• Increased regulation of commercial airlines impacting flight hours
• Industry-wide reputational risk
• Compliance with increasingly complex regulations

Opportunities

• Reducing carbon emissions through selling used serviceable material
• Collaboration with Aero Design Labs to reduce fuel consumption and carbon emissions

Reporting Standards

Frameworks Used: GRI, SASB, TCFD

Certifications: AS9100, AS9110, AS9120, FAA Diamond Award of Excellence for safety training

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Goal 12 (Responsible Consumption and Production)

Business model centers on repairing equipment rather than discarding it, reducing waste and the aviation industry's global footprint.

Sustainable Products & Innovation

• ADL B737 drag reduction kits

Awards & Recognition

• Military Friendly Top 10 Brand
• Military Friendly Top 10 Supplier Diversity Program
• Military Friendly Employer – Silver
• Military Friendly Spouse Employer
• Bloomberg Top 200 Federal Industry Leaders
• Defense News Top 100 Defense Contractors
• Secretary of Defense PBL Award
• Fortune 1000
• Silver award in the Ministry of Defence Employer Recognition Scheme
• U.S. Veterans Magazine Best of the Best
• Top 100 Aerospace & Defense Companies
• Military Times Best for Vets Employers
• NSPA #1 Outstanding Source of Repair
• Aviation Week Network Top 10 Airframe MROs
• FAA Diamond Boeing Performance Excellence Awards

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Emissions increased 3% from the 2022 fiscal year but decreased by 6% from the 2021 fiscal year and 18% from the 2020 fiscal year. Total emissions intensity (MT CO2e/$M) decreased by 6% from the 2022 fiscal year, 22% from the 2021 fiscal year, and 15% from the 2020 fiscal year.
• Total energy consumption increased less than 1% in the 2023 fiscal year from the 2022 fiscal year and decreased 9% from the 2021 fiscal year and 15% from the 2020 fiscal year. Energy intensity decreased.

Social Achievements

• Total quality escapes during maintenance decreased by 43% in FY2023 compared to FY2022.

Governance Achievements

• Greenhouse gas emissions for the 2023 fiscal year were independently verified by Apex Companies, LLC.

Climate Goals & Targets

Environmental Challenges

• Limited manufacturing activities restrict the scope of typical manufacturing company impact areas.
• Limited control of use-phase emissions due to customer-dictated flight plans.
• Data limitations in consistently reporting consumption volumes across sites.

Mitigation Strategies

• Continuing to investigate ways to minimize jet fuel use in diagnostic testing and repair.
• Evaluating systems and processes to consistently report consumption volumes.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Global Anti-corruption Policy
• Supplier Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: GRI, SASB

Certifications: Null

Third-party Assurance: Apex Companies, LLC (Greenhouse Gas Emissions)

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Upgraded exhaust system at Landing Gear Overhaul facility in Miami to reduce heavy metal and carbon emissions.
• Component Repair facility in New York implemented an energy reduction plan, reducing energy consumption.
• Replaced older steel panel cladding with new siding on Component Repair facility in Amsterdam to reduce gas usage.
• Installed drag reduction kits on five commercial aircraft to reduce fuel consumption and carbon emissions.

Social Achievements

• Implemented a company-wide Safety Management System (SMS), the first independent third-party MRO organization to do so.
• Total quality escapes decreased by 43% in FY2023 compared to FY2022.
• Expanded AAR Fellowship Program to two Indianapolis-area colleges and one Chicago college.
• Increased spend with diverse suppliers to $24.6M in FY2023 from $22.4M in FY2022.
• Achieved a Recordable Injury and Illness Rate (RIIR) of 2.4 in FY2023, a 12% decrease from FY2022.
• Rate of recordable incidents resulting in days away from work decreased by 17% in FY2023 from FY2022.

Governance Achievements

• Enhanced due diligence practices to identify higher-risk third parties and implemented a plan to monitor anti-corruption activities.
• Conducted four third-party audits on business partners and three audits to mitigate Foreign Corrupt Practices Act risks.
• Enhanced the responsiveness and effectiveness of the Security Operations Center (SOC).
• Created a new role to oversee data privacy.
• Strengthened Supplier Code of Conduct with new requirements for supplier disclosures.

Climate Goals & Targets

Environmental Challenges

• Increase in greenhouse gas emissions in FY2023 driven by increased US eGRID emission factors.
• Dynamic market conditions leading to an evolving risk profile.

Mitigation Strategies

• Ongoing evaluation of risks via formal and informal processes to mitigate key risks.
• Continued expansion of risk identification through stakeholder feedback.
• Working with a third party to track emission levels at the Miami Landing Gear Overhaul facility.

Supply Chain Management

Supplier Audits: Four third-party audits on certain business partners

Responsible Procurement

• Supplier Code of Conduct

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI, SASB, TCFD

Third-party Assurance: Third-party verification for greenhouse gas emissions

Sustainable Products & Innovation

• Drag reduction kits

Awards & Recognition

• Newsweek’s America’s Greatest Workplaces for Diversity 2023
• FAA Diamond Award of Excellence for calendar year 2022

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Total Scope 1 and 2 emissions decreased by 2% compared to FY2023 while revenue increased. Amsterdam Component Services facility installed a solar panel field.
• Scope 1 emissions decreased by approximately 47% in FY2024 compared to FY2023 at the Amsterdam facility (attributed to new insulation).

Social Achievements

• 54% of new hires in the U.S. were from racially/ethnically diverse backgrounds.
• Earned Newsweek recognition as one of America’s Greatest Workplaces and America’s Greatest Workplaces for Diversity.
• Earned Newsweek recognition as one of America’s Greatest Workplaces for Mental Wellbeing.
• Earned 2024 Military Friendly® Gold Employer and Military Friendly® Spouse Employer designations.
• Launched AAR Career Pathways program to provide employees with visibility on career growth.

Governance Achievements

• Expanded Supplier Code of Conduct to include subcontractors and independent contractors.
• Streamlined Global Anti-Corruption Policy and created standalone third-party due diligence procedures.
• Implemented a Companywide safety site for employees to access safety information and resources.

Climate Goals & Targets

Environmental Challenges

• Integrating newly acquired businesses (TraxSM and Triumph Group's Product Support) into sustainability strategy and training programs.
• Data limitations in Scope 1 and 2 emissions reporting due to incomplete invoices (6.6% of total reported usage estimated).

Mitigation Strategies

• Created a plan for talent management leadership to visit newly acquired locations to integrate new employees into AAR's culture and strategy.
• Upgraded Scope 1 and 2 data tracking using a third-party platform to enhance reporting efficiency.
• Using a third-party platform to enhance efficiency of reporting and to create more opportunities for visibility into the data.

Supply Chain Management

Responsible Procurement

• Supplier Code of Conduct (includes human rights, safe labor, trade compliance, environmental standards, AI, and responsible sourcing).

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Universal Standards 2021, SASB guidance for Aerospace & Defence industry, TCFD framework

Third-party Assurance: Third-party assurance for greenhouse gas emissions

Awards & Recognition

• USA TODAY's America’s Best Climate Leaders
• Newsweek's America’s Greatest Workplaces
• Newsweek's America’s Greatest Workplaces for Diversity
• Newsweek's America’s Greatest Workplaces for Parents & Families
• Newsweek's America’s Greatest Workplaces for Mental Wellbeing
• Military Friendly® Gold Employer
• Military Friendly® Spouse Employer