Sustainable aviation finance: Integration of environmental impact mitigation and green investment strategies

The aviation sector is under increasing pressure to reduce its environmental impact and meet ambitious net-zero emissions targets by 2050. However, airlines have difficulties attaining conventional green finance due to the sector's uncertain path to decarbonization. Through a systematic literature review, this research aims to find how green financing mechanisms can address the challenges and uncertainties of the aviation sector decarbonization path and develop a bridge in how green financing can help the aviation industry transition to sustainability, with a focus on financial instruments such as green bonds, sustainability-linked loans, and carbon offset programs. Results indicate that airports have effectively used green bonds for sustainable infrastructure initiatives. Innovative financial instruments are popular, providing airlines with incentives to meet specified environmental, social, and governance criteria. Furthermore, the significance of sustainable aviation fuel (SAF) in the decarbonization initiatives of the industry, with green finance existence, is crucial for funding SAF infrastructure and technological advancement.