As we continue with our theme of Sustainability throughout the month of April, in support of World Earth Day, we asked Scott Bergeron for his thoughts on ESG in the maritime industry.
What does ESG mean to the maritime industry?
In the maritime industry, ESG principles are becoming increasingly important as companies strive to reduce their environmental impact and ensure responsible labour practices. The industry is working to align its business practices with the United Nations 17 Sustainable Development Goals. The risks of making wrong decisions on sustainability issues, due to insufficient research or understanding, is more significant now than it has ever been. Companies are investing in cleaner technologies and practices such as fuel efficiency, renewable energy, hardware solutions, digitalisation, and waste management to reduce their carbon footprint and protect the ocean and its inhabitants. They are also focusing on social responsibility by looking into the welfare of their employees, both on shore and at sea, in respect to occupational health, and safety, and collaborating with local communities to ensure that their operations are beneficial to the area.
Finally, companies are focusing on governance by ensuring that their code of conduct is consistent with society and community expectations. Often extending these corporate governance requirements to their suppliers (such as with the IMPA Act for responsible supply chain management). Management training in ethics and anti-corruption, diversity, and cybersecurity also play a significant role in the industries governance strategy.
Why is ESG particularly important to the maritime industry?
ESG is particularly important in the industry because shipping transports about 80% of all traded goods and the shipping industry is responsible for 3% of the worldwide greenhouse gas emissions. ESG helps ensure that the maritime industry considers the long-term sustainability of their operations and that their activities are conducted responsibly and in compliance with applicable regulations. Additionally, shipping companies that demonstrate a commitment to ESG initiatives can attract investment capital and secure insurance at more favorable terms, helping them to remain competitive in an increasingly challenging market.
What are the benefits of an ESG strategy?
ESG factors can help identify and manage a variety of risks, including reputational, regulatory, and environmental risks. Studies have shown that properly implemented ESG strategies can result in positive financial returns over the long term. ESG-focused companies are becoming increasingly attractive to clients, investors, and prospective employees, especially those that are socially conscious and value-driven. ESG strategies can also lead to improved performance, both financial and operational, and enhanced corporate governance, resulting in more informed decision-making and higher transparency. ESG strategies can result in a more engaged and loyal workforce, leading to improved employee productivity and morale.
Is there a particular ESG focus for the Maritime Industry in 2023?
The ESG focus for the maritime industry is to align itself to the environmental goals set by the International Maritime Organisation (IMO). The trade press is full of articles about various initiatives and joint ventures investigating a broad array of ideas to decarbonise the maritime industry.
Partnerships, such as Oldendorffs multi-year research agreement with MIT, have been signed to research possibilities to achieve the IMO 2030/50 requirements. Feasibility studies are being made into using alternative fuels instead of the conventional fossil-based fuels used today. Engine designers are exploring how to incorporate these new fuel types. Trials are taking place across the world with ships using biofuels. Fuel saving devices including Becker Mewis Ducts and rudder bulbs are being retrofitted onto ships. Advanced hull coatings, that reduce hydrodynamic drag, and propellor coatings, that reduce marine growth and improve propulsion, are also being tested. Some vessels have long stroke engines and auxiliary engine economisers, which reduce fuel consumption and emissions, in addition, emission abatement technology is being used. There are also initiatives looking into the best way to optimise port calls by collating the information from the vessel, port, and receivers to save fuel and streamline the port operation. The Clydebank Declaration was signed at the COP26 to support the establishment of Green Corridors, these are being used as working examples to accelerate progress in understanding and tackling the decarbonisation of specific shipping routes. Wind assistance is being used by ships in the form of Flettner rotors, sails, or towing kites. These innovations all increase energy efficiency, thereby reducing fuel consumption and the resulting emissions. This demonstrates that the shipping industry is focusing on its responsibility to the environment, however, it still has a long way to go, with no silver bullet and no time to waste.
For more ESG insight, you can follow Scott on LinkedIn