In an exclusive interview to SAFETY4SEA, Mr Peter Jameson, Partner, Boston Consulting Group (BCG), highlights that ESG is more than just tackling with emissions. It equally involves actions like health and safety, diversity and equal opportunities, but these are often less regarded topics to a business’s development. In that regard, industry needs to realize the full potential of ESG in shipping and develop tangible ESG strategies with clear roadmaps and KPIs.
he industry is moving in the right direction, just not fast enough’’ Mr Jameson notes and suggests that IMO should increase its responsiveness to the key topics involving ESG, considering that regulators play a critical role in setting up frameworks and regulations.
SAFETY4SEA: What should be industry’s key priorities in the agenda with regards to ESG for the next five years?
Peter Jameson: In the first instance, we need to ensure more businesses of all sizes in our industry understand what ESG is, and why it matters for the preservation of the planet, well being of societies, and ultimately, to the financial performance of companies. Many still don’t. From there, businesses must prioritise developing an appropriate ESG framework. Our ESG Playbook for Shipping co-developed with the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping can support here. Although carbon emissions will be at the forefront of attention and legislation for the next 5 years. It’s important not to get “carbon tunnel vision” and ensure the ‘S’ and ‘G’ (social and governance) components are well considered. For example, good practices in these components of ESG help nurture the innovation and diversity of thought needed to deliver real change on the environmental requirements.
S4S: What are the key barriers that the maritime industry is currently facing with regards to ESG? What are your suggestions to turn these into opportunities?
P.J.: One of the most significant barriers to realizing the full potential of ESG in shipping is the industry’s fragmented nature. The industry must overcome this and become more collaborative, building mutually beneficial partnerships that help achieve ESG goals. The ecosystem must work together. It is also worth noting that shipping represents almost every company’s Scope 3 emissions. Thus, ESG barriers for shipping are barriers for all. Due to the size and complexity of our industry, change is slow, but once the engine is greased, it will support every industry’s ESG push.
S4S: How can the maritime industry actually address all ESG requirements? What are the lessons learned from other sectors?
P.J: A vital first step in addressing ESG requirements and bringing shipping in line with other industries is moving past rhetoric. In the main, only the biggest shipping players are developing tangible ESG strategies with clear roadmaps and KPIs. We need to ensure businesses of all sizes in shipping have the targets and plans in place to be truly accountable and transparent in what they’re trying to achieve in line with regulations and industry targets. The ESG Playbook helps support this.
S4S: How could industry stakeholders best collaborate in support of sustainable development?
P.J.: Industry stakeholders first need to decide who is most important for them to collaborate with. For example, we see that a vessel owner’s key collaborators would be investors, debt providers, vessel operators, technical managers, and fuel suppliers. While for an operator the group would include investors, cargo owners, vessel owners, technical managers, and fuel suppliers. It’s then important to identify the dependencies a stakeholder would have on each of its collaborative group with view to potential ESG actions. So, if we take the example of the operator again, we see them needing investor buy-in for ESG strategy and capital, while on the flip-side, the investor would depend on the vessel operator’s ESG performance to reach ESG targets for portfolio companies. A potential ESG action from this would be to ensure investor buy-in to begin the ESG journey and capital allocation towards prioritized ESG bets. We’ve detailed a number of different stakeholder dynamics in the ESG playbook.
S4S: Do you believe the maritime industry is moving in the right direction? What do you see as the defining ESG trends driving maritime toward the future?
P.J: The industry is moving in the right direction, just not fast enough. But what’s great to see in shipping is that players are pushing regulators to act and provide legislation more firmly, rather than the other way around. In terms of driving the industry forward, the social and governance part of ESG ensures a much more holistic development of a business than simply addressing emissions related issues. Health and safety, diversity and equal opportunities are considered in ESG, but so too are often less regarded topics key to a business’s development, such as training/education and reporting, disclosures and assurance.
S4S: When it comes to ESG reporting, what are the top 3 priorities for industry stakeholders to keep in mind?
P.J.: The top three ESG priorities for industry stakeholders are:
1. Legislation – Legislators (e.g., the IMO, EU…and beyond) need to create a level playing field. Financially anchored market based measures are critical to support those that are willing to take action. These need to be applied holistically across the global industry.
2. Transparency –Cargo owners, lenders and beyond need to have access to transparent and reliable data, so that decisions can be made from a solid foundation of facts. The introduction of CSRD (Europe) is one step in the right direction.
3. Ecosystem – initiatives, like Green Corridors, FMC (First Movers Coalition) must continue to be the place where all players across the ecosystem can work together to accelerate the sustainability transition.
S4S: How can industry stakeholders bring ESG to life in their companies? What role does management play towards?
P.J.: Industry stakeholders can bring ESG to life in their companies by first establishing their baseline position, and from there benchmarking and identifying blind spots. Management has a key role to play in not only shepherding this process and building a foundational strategy, but also in aligning that strategy with industry partners and stakeholders to ensure broader benchmarks can be set by the industry. Targets and ambitions are the first step, but where the rubber hits the road is ensuring that required actions are imbedded into daily activities, not just a topic that sits on the side.
S4S: If you could change one thing in the industry to boost ESG awareness in the shipping industry from your perspective what would it be and why?
P.J: It would be to increase the IMOs responsiveness to the key topics involving ESG. Regulators play a critical role in setting up frameworks and regulations. Given the global nature of shipping, it takes a global organization to have real impact. The IMO is best placed to raise the ambition and remove ambiguity in the future.
S4S: Do you have any new projects / plans with regards to ESG and the shipping industry that you would like to share with industry stakeholders?
P.J.: We see our ESG Playbook, developed in collaboration with the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping, as an important step in reaching a diverse range of shipping companies that may not yet have started thinking of ESG or are in the early stages of forming their strategies. 400 industry stakeholders joined the launch event of this new resource, showing the clear appetite for, and importance of, the topic. We will continue working with our partners and clients to ensure the industry realises both the economic and social benefits a strong ESG strategy provides.
S4S: What is your key message to industry stakeholders towards sustainable shipping?
P.J.: Simply, that the time to act is now. ESG can help companies create a competitive edge today. Tomorrow, it will be a license to operate.
The views presented hereabove are only those of the author and do not necessarily reflect those of SAFETY4SEA and are for information sharing and discussion purposes only.