Addressing ESG factors can help organizations manage their environmental and social imprint and determine their business risks and opportunities. In addition, the United Nations’ Sustainable Development Goals (SDGs) are increasingly being recognized as a beneficial framework for responsible investment as the business world shifts its focus more intensively on ESG.
Due to shipping industry’s vulnerability to environmental risks, such as accidental spills and greenhouse gas emissions, the pressure for a fact-based disclosure of their ESG strategies by stakeholders intensifies. Marine resources have to be protected and used sustainably and it is important to carefully manage the oceans. Given that activities deriving from shipping can have both positive or negative impacts, several frameworks are constantly developing regarding the monitoring of ESG performance.
To meet increasing stakeholder demand, some businesses are moving beyond the standard ESG approach and are based on the SDGs which offer a realistic framework for ESG mapping at a higher level and can help to increase the adoption of sustainable investing, encourage responsible corporate behavior, and integrate sector and business specific ESG factors with broader social issues and global environmental goals. Long-term value development for business and society is the goal of ESG-based investment decisions.
This is a natural fit with the SDGs, which were founded on globally shared values, social expectations, and a sustainable and inclusive approach to economic growth and well-being. SDGs are global goals set out by the United Nations, whereas ESG is a rating system used by companies to measure their environmental and social credentials.
Although they are non-binding, the SDGs provide a list of targets that can really help the private sector construct their plan of action. Main points of the SDGs are human well-being, sustainable economies, education and equality, innovation, decarbonization and energy, and environmental protection. The Goals monitor progress and can ensure accountability of all companies, enclosing all aspects that concern ESG indicators.
ESG factors can be roughly translated to SDGs on the corporate level as unique parts of ESG considerations can be assigned to all 17 goals. Businesses can utilize multiple strategies to align with the SDGs, including assessing, mapping, and setting goals, strategic integration and collaboration, and reporting and communication. The SDGs provide a wide range of chances for businesses to make a difference, with 169 specific aims. Ultimately, organizations and investors who proactively focus on the SDG Agenda 2030 are likely to improve their ESG score and uncover new growth and development opportunities.
As we get closer to 2030, the shipping portfolios must be aligned with the climate goals, sustainable policies help with the decision-making, while published ESG reports reinforce transparency to the capital market. It is noticeable that the majority of shipping organizations mentions the SDGs in their public websites and ESG reports which demonstrates that the maritime industry has actively embraced sustainability supporting UNSDGs throughout its sectors.
