During session 4 of the 2022 SAFETY4SEA Forum, the panelists focused on the key steps to be taken towards an ESG strategy in shipping, along with ESG metrics monitoring and reporting. Speakers agreed that the industry’s initiatives and portfolios for a sustainable future should meet all the necessary requirements and go beyond minimum standards.
A responsible and purpose-driven maritime needs to keep up with sustainability and ESG trends while casting the light on the opportunities and benefits of the ESG challenge. According to Ms. Aiden O’ Driscoll, Vice President and Director Corporate Services, Ardmore Shipping Services Limited..
When talking about the E of ESG, decarbonization is the topic that is most prominent right now
Agreeing with Aiden O’ Driscoll, Mr. Raal Harris, Chief Creative Officer, Ocean Technologies Group added that:
Decarbonization and environmental regulations shouldn’t be approached as a burden by the ship operator.
At the same time, all speakers agreed that the most recent trend addresses ESG in a more holistic way with a special focus on crew welfare. After the disruptions caused by the Covid-19 pandemic, the industry is starting to focus, not only on Environmental, but on Social and Governance issues as well.
ESG challenges
When asked about key ESG challenges the panelists named but a few:
- Decarbonization comes first in the industry’s agenda for the last ten years. Reduced carbon intensity that the sector has achieved over time makes it a top performer regarding energy efficiency and emissions.
- EEXI, CII, EU Trade Schemes and Regulation. A great amount of new regulations will be put into effect moving forward and it remains to be seen how the market will react to them.
- Uncertainty and ambiguity. Shipping operates with uncertainty due to the pandemic and the current geopolitical situation, and the lack of maritime reporting standards complicate things. Aideen O’Driscoll added that there is need for talent and overall adaptable people to work in this grey landscape.
- Transparency. ESG is all about what you can prove, and it is known that shipping’s level of transparency is not satisfactory.
- Definition of ESG. How key shipping stakeholders choose to define ESG, as well as their material facts is of great importance and will define a company’s future moves.
- Finding balance between technology availability, readiness and safety. Early adaptation is crucial so smaller players don’t stay behind and be overpassed by top-tier players of the value chain.
As Ms. Aishwarya Iyer, ESG Manager, Rightship puts it:
Shipping needs to be viewed as part of a value chain that is being influenced by so many other players along that chain, and understand how does that influence the very definition of ESG
Transparency and standards
Shipping is not homogenous. There are top tier operators working with full transparency, and then there are top tier operators working in secret
…argued Mr. Apostolos Belokas, Managing Editor, SAFETY4SEA.
Transparency is no longer a choice, but an obligation, demanded by employees, customers and banks, and there seems to be an alignment and consistency coming through. Underlining the importance of proving excellence and commitment, Mr. Raal Harris pointed out that “the problem of minimum standards can lead to minimum standards”. Shipping stakeholders and the market are the ones that will dictate the standards with which the industry will need to comply with.
On the other hand, the industry is expected to receive more guidance on standardization and detailed procedures coming from either the EU or the IMO. Of course, technology will play a key role since it is an unbiased way to take measurements and can help understand, compare and terminalize the responsibilities, and set reposting baselines, as stated by Mr. Gabriele Dado, Commercial Director, Safetytech Accelerator.
Moving forward, the panelists agreed that an alignment in terminology and assessment will help small operators who struggle a little bit more due to the resource intensiveness an ESG strategy requires.
Best Practices
Maritime has come a long way since ESG first appeared and has a lot to showcase. “From a regulatory perspective, the Emissions Trading Scheme, Poseidon Principles and the Sea Cargo Charter are all initiatives that will put pressure in the industry to act quicker and better” noted Mr. Oistein Jensen, Chief Sustainability Officer, Odfjell SE.
Mr. Raal Harris continued by saying that there is a lot to learn from the cruise industry that seems to be a lot more ESG focused and purpose-driven, maybe due to the more direct communication with both customers and coastal communities.
During the discussion, best practices from other industries were also mentioned. According to Ms. Aideen O’Driscoll the All Aboard Alliance represents a great initiative in the Diversity and Inclusion sector, that Shipping can learn a lot from since the industry falls behind in that domain.
The Just Transition Group that focuses on workers’ rights and livelihoods while economies are in the middle of the green shift, also, gives a great example of empowering diversity in the workforce and attracting a wider pool of talent
perfectly added Mr. Raal Harris.
Social and Governance in the spotlight
As stated by Mr. Ostein Jensen “Sustainability is so much more than reducing carbon”. The pandemic brought to light the physical and mental health importance for people stuck at home and at sea. The priority has shifted to the well-being of the industry’s workforce and when talking about diversity we should be talking – as he added – about “diversity of mind”.
The importance of safety was highlighted by Ms. Aideen O’Driscoll, along with incorporating technologies that enhance the safety of seafarers at sea, while Mr. Raal Harris mentioned that people-focused organizations can and will lead to attracting top talent and solving a good amount of the industry’s problems.
As far as governance is concerned, cyber security continues to be on top of the list that most interests the industry, and Ms. Aishwarya Iyer thinks the setup of an ESG task force from different departments could bring the diversity that the industry asks for.
The panel was concluded with a rather controversial suggestion regarding labor rights. Mr. Gabriele Dado suggested that maybe it is time to look into Fitness of Duty and availability of crew tailored in each specific employee according to their individual needs. Mr. Apostolos Belokas agreed to that kind of forward thinking, although he is not sure “that the industry has an open mind of that level”.
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