Global community is looking forward to watching the critical decisions of business leaders for the future of the planet as the COP 26 Conference in Glasgow is approaching. Recently, the UN outlined key recommendations for business leaders and policy makers to accelerate an equitable decarbonization of maritime transport in line with a 1.5°C trajectory.
he policy brief comes from a total of over 100 stakeholders from business, policymakers, NGOs and science who gathered on the auspices of UN Global Compact Blue Road to COP 26 earlier in the year, in order to discuss how to advance ocean-climate solutions. Blue Road to COP 26 was launched by Sustainable Ocean Business Action Platform of the UN Global Compact in March 2021, to help ocean industries advance progress towards the Sustainable Development Goals (SDGs).
Adopted by 196 Parties in 2015, the Paris Agreement has been a landmark move from global community in recognizing the effects of climate change, aiming to limit global warming to well below 2°C, preferably to 1.5°C, compared to pre-industrial levels. According to IPCC, this requires a 45% drop in world’s emissions by 2030 and net-zero emissions by mid-century. The fact that shipping as a transport mode accounts for about 3% of global emissions, makes the need imminent for the sector to align with Paris Agreement trajectory and achieve full decarbonization by 2050, although current IMO strategy eyes a 50% GHG emissions reduction by 2050, compared to 2008.
The issue becomes clearer as the latest IPCC report, issued in August, highlighted that many effects of climate change observed on Earth are unprecedented in thousands of years, and some others, like sea level rise, are irreversible over hundreds to thousands of years, and only strong and sustained reductions in CO2 emissions would limit those impacts.
Aligning shipping with Paris Agreement – Key ‘points to watch
In view of the above, the UN Global Compact notes:
- Now is time for IMO Member States to align with Paris Agreement goal – full decarbonization by 2050.
- This accelerated shipping decarbonization must enable equitable access to developing nations.
- Zero-carbon shipping requires reskilling, upskilling and new skills, incorporating a human-centered approach to decarbonization.
- National Governments should include shipping in their Nationally Determined Contributions (NDCs) and piloting domestic incubators, among other efforts.
- Shipping should be flexible for an anticipated multi-fuel future (e.g., by converting an engine to use a different fuel), as it has become evident that there is no one-size-fits-all solution for shipping fuels.
- The entire value chain must be harnessed if shipping is to decarbonize, moving beyond the remit of IMO.
- Setting intermediary targets will help the task ahead by defining clear milestones from now to 2030.
The pathway for business leaders: What can you do?
- Set a science-based target to structure a GHG trajectory aligned with the 1.5°C target. This could be informed by the Science Based Targets initiative methodology for shipping.
- Along with other parties, introduce a meaningful market-based measure that puts an adequate price on carbon and/or GHG emissions before 2025, which will require a regulatory framework at the international level (IMO) with enforcement mechanisms.
- Ensure operational alignment and broader strategic support for all of the interconnected Global Goals. Do no significant harm on environmental, social and governance targets.
- Adopt steps towards a transition to zero-carbon shipping, including by committing to uphold human and labour rights in line with the Ten Principles of the UN Global Compact (Principles 1 to 6) and the UN Global Compact Sustainable Ocean Principles (Principle 7). The principles seek to establish a culture of integrity by helping companies to maintain their basic corporate responsibilities to people and planet.
- Ensure transition plans are founded in and informed by stakeholder engagement and social dialogue and are consistent with corporate human rights responsibility as set out in the UN Guiding Principles on Business and Human Rights.
- Develop new qualifications for workers across the fuel supply chain to ensure new fuel types are handled safely. This could include an update to safety legislation, such as IGF Code, to ensure safe onboard handling and use of alternative fuels.
- Introduce decision-making power and mechanisms for maritime workers, including, but not limited to:
o Decision-making over health and safety standards at all levels.
o Space for unions to bargain over a broad range of conditions.
o Worker participation in the creation of training programs and standards.
o Consideration of how to harness the transition to attract a diversity of workers to careers at sea.
- Engage with Governments to establish regulations and incentives for zero-emission shipping, as well as public-private national incubator programmes and pilot projects.
- Establish and engage in private and public-private partnerships in order to promote and share knowledge on technologies and solutions.
-Notable examples: Getting to Zero Coalition
- Develop a company strategy on which the market can place a price.
- Include a long-term fleet transition plan based on resource consumption (including materials, not just cost), emission and social acceptance factors.
- Help the maritime value chain attract funding through harnessing innovative financial mechanisms. such as blue bonds, in line with international standards and principles.
- Educate potential issuers and finance stakeholders to improve recognition and understanding, reducing pricing.
- Develop or coalesce on transparent, measurable, verifiable criteria/key performance indicators (KPIs) for sustainable shipping.
-Notable examples: In January 2021, Norwegian Odfjell successfully issued the first sustainability-linked bond in shipping.
- Enter into cross-value chain partnerships.
- Private-sector stakeholders such as insurers and charterers should measure, validate and report energy efficiency and GHG performance in their shipping portfolios.
- Cargo owners should adopt a human rights and environmental due diligence lens — demanding green, human-centred shipping conditions from their suppliers and freight forwarders.
- Set a science-based target with a clear Scope 3 emission reduction target which includes the shipping supply chain and considers labour rights and health and safety.
-Notable examples: The Clean Cargo Working Group, Cargo Owners Zero Emission Vessel Initiative