During the 2024 SAFETY4SEA Dubai Forum, Capt. Anuj Chopra, Managing Director, MaritimESG Middle East Project Management LLC, gave a presentation on how adopting ESG practices enhances operational resilience, safety, efficiency, and profitability.
Environmental, Social, and Governance (ESG) is no longer a passing trend or a corporate buzzword. In the maritime industry, ESG represents a paradigm shift—a new benchmark for excellence. Far from being just another regulatory checkbox, ESG embodies best management practices that enhance operational resilience, safety, efficiency, and ultimately, profitability.
ESG: More than compliance
A common misconception within maritime circles is that ESG is synonymous with regulatory compliance. While compliance ensures a company’s legal right to operate, ESG pushes beyond the bare minimum to focus on governance, social responsibility, and environmental stewardship.
- Governance (G): At the core of ESG is governance, which underscores the importance of transparency, ethical leadership, and accountability. Companies with strong governance structures are more resilient and better equipped to manage crises.
- Social (S): The social pillar prioritizes the well-being of stakeholders, including employees, seafarers, and communities. Fair labor practices, diversity, inclusion, and welfare are critical components.
- Environmental (E): Finally, the environmental aspect focuses on reducing emissions, improving fuel efficiency, and minimizing the ecological footprint.
To fully grasp the importance of ESG, think of it as an investment in operational resilience. Enhanced safety measures, for instance, lead to fewer accidents, which not only protect lives but also reduce costs and increase efficiency.
Consider these statistics: in 2018, there were 185 accidental deaths at sea. Since then, the number has risen by 10% annually. These figures, though underreported in public databases, highlight the dire consequences of neglecting safety and operational resilience. By adopting ESG principles, the industry can reverse these trends, save lives, and improve profitability.
Skepticism and resistance: A barrier to progress
Despite its clear benefits, skepticism persists within the maritime sector. This resistance to change is rooted in a preference for minimal compliance, a “good enough” approach that stifles innovation. Yet history teaches us that progress requires challenging the status quo. Without this mindset, modern technologies like cell phones and satellites would never have been realized.
The maritime industry must ask itself: Do we want to lead, or be led?
Transparency and accountability: Closing the gaps
Transparency is a recurring demand from customers and society. Yet, the maritime industry has often fallen short. A glaring example is the rise of the “dark fleet,” an opaque segment that emerged during the Russia-Ukraine conflict. This lack of transparency undermines trust and hinders progress.
Regulatory bodies like the International Maritime Organization (IMO) have historically set minimum compliance standards based on consensus. However, the European Union (EU) and Scandinavian countries are pushing for stricter, independent regulations. Norway, for instance, is implementing new Environmental, Social, and Regulatory (ESR) requirements from January 2024. These developments signal that the industry must evolve, or risk being left behind.
What customers want
At its core, shipping is a service industry. Customers demand reliability, alignment with sustainability principles, and transparency. Sustainability reports, once optional, are now becoming prerequisites for doing business. Companies that fail to meet these expectations risk losing their competitive edge.
Collaborations: The path forward
Collaboration is key to overcoming challenges. Partnerships among shipping companies, regulatory bodies, and stakeholders can drive innovation and set new standards for the industry. Events like the COP conferences demonstrate the global focus on sustainability and the urgent need for collective action.
- COP27: Called out greenwashing, urging genuine commitment to sustainability.
- COP28: Highlighted energy pragmatism and equitable energy distribution.
- COP29: Focused on mobilizing financial resources, including $300 billion annually for developing nations.
The maritime sector must align itself with these global efforts. Initiatives like the UN Global Compact and GRI standards provide frameworks for corporate ESG strategies. However, shipping remains underrepresented, underscoring the need for proactive engagement.
Leading with environmental stewardship
The environmental pillar is perhaps the most visible aspect of ESG. It includes reducing emissions, improving fuel efficiency, and minimizing the ecological footprint. Leadership in this area requires ethical, transparent, and efficient management practices.
The social imperative: People at the center
Seafarers and employees are the backbone of the maritime industry. ESG emphasizes fair labor practices, welfare, and inclusion. Companies that prioritize these values not only improve morale but also attract and retain top talent.
The future of ESG in maritime
The maritime industry stands at a crossroads. ESG is not a fleeting trend but a foundational shift in how businesses operate. Companies that embrace best management practices, prioritize transparency, and align with global sustainability goals will lead the way into a more resilient and profitable future.
The question is no longer why ESG? But rather, why not you?
The views presented are only those of the authors and do not necessarily reflect those of SAFETY4SEA and are for information sharing and discussion purposes only.
Above article has been edited from Capt. Anuj Chopra’s presentation during the 2024 SAFETY4SEA Dubai Forum.
Explore more by watching his video presentation here below
