How are the ESG and a sustainability agenda aligned or different?
The terms ESG and sustainability of often interchanged, however there are important nuances between these two terms which should be considered.
ESG is a set of standards measuring a business’s impact on society, the environment, and how transparent and accountable it is. The degree of compliance against the stated ESG policy is assessed against a variety of metrics. This assessment may be carried out by third party organisations, banks or the cargo interest or charterer.
Sustainability is about running a successful and resilient business which includes adopting ESG principles and delivering positive outcomes against them. This will become increasingly important as we live in an ever expanding data and information rich world where the speed of communication increases through social media.
Sustainability provides more space for aspirational initiatives which may not fit the typical compliance structure or one of the many metrics proposed. The danger is that too much focus on compliance with these ESG metrics may dilute the effectiveness and ambition of such programs.
What does ESG mean to your organisation?
Lookout Maritime was founded to support companies on their sustainability journey with a particular focus on operational reliability, safety and near-term emission reduction from the existing fleet of vessels serving global trade and prosperity daily.
To reduce the implementation risk and the investment needed requires the careful consideration of the wider regulatory and technical landscape and then blending and integrating this with the commercial and market outlook and realities for that business. The priorities and recommended sustainability roadmap typically varies with trade, market segment and company structures.
Why is ESG particularly important to the maritime industry?
Operating flawlessly in our industry 24/7, 365 is inherently challenging. Unfortunately, we suffer reputationally from a small number of bad actors, who tarnish the good reputation of the many responsible operators.
More than $3bn has be invested in more than 300 new maritime focused software companies which will provide increasing benchmarking services which are easily accessible. These platforms increase our ability to differentiate between these two groups and identify the responsible actors with improving accuracy.
It should be remembered that data is a long living asset and the ability to look forward as well as back provides key decision makers with the tools they need to reduce risk in their maritime supply chains.
When done correctly these initiatives become an important part of building a positive culture. This supports the propensity for individuals and businesses to act in the right way when think they aren’t being watched which brings a number of risk reduction benefits.
What are the benefits of an ESG strategy?
Businesses without an effective sustainability strategy and program expose themselves to a much greater risk following any incident even relatively minor ones. They will be required to provide evidence of the steps they have taken to reduce their operating risk in a credible way.
Without a well-considered and implemented sustainability strategy it becomes more challenging to build a positive culture. This is vital to increase employee engagement, attraction and retention to secure the best talent.
Is there a particular ESG focus for 2023?
It is recommended that your ESG strategy considers the following three components and is not weighted towards the environment only.
- Environmental – focus on near term optimisation for example solving the sail fast to wait split incentive. Don’t use metrics like CII in isolation, it is important to first understand what good looks like for your business and trade and use these to assess performance between contracting parties.
- Social – ensure effective safety performance, wellness and training programs are provided to reduce accidents, improve culture and employee engagement.
- Governance – use sustainability and ESG criteria to assess your business partners and to secure access to ongoing business as a preferred supplier. Stamp out any corrupt practices from other stakeholders. Understand the significant implications of the introduction of the EU ETS on KYC to open a carbon registry account.
About Lookout Maritime:
Lookout Maritime was established in April 2021 through a clear need to deliver practical solutions to the increasing demand for more sustainable business practices in the maritime industry.
Our focus areas include operational reliability, safety improvement, near term emission reduction and advising new technology and software companies entering the maritime industry on these aspects.
We partner and collaborate with leading experts and respected organisations to identify practical and executable solutions to the sustainability challenges and opportunities we face as an industry.