As part of World Earth Day we have dedicated the month of April to Sustainability and have asked experts in the maritime industry for their thoughts on ESG and how this affects the maritime industry.
We start the month with a Q&A with the former Corporate Director of energy projects for the Schulte Group, Angus Campbell.
What should ESG mean to an organisation?
An important question. When a shipping company embarks on defining what it means to focus on the environment, society and governance in the context of their business they have to mean it. The reputational risk of claiming that this is a priority, without getting meaningful top to bottom participation within the organisation, can be high. As charterers, banks and other participants in the maritime value chain look at ESG as a requirement for participation, you must be able to demonstrate such sustainability under audit, to prove that there is real and measurable operational substance underpinning the strategy. Not always easy, given the capital cost and difficulty predicting specific regulations and direction that each sector will eventually take.
Why is ESG particularly important to the maritime industry?
As an industry with a significant impact on the environment, it is likely to be under the microscope. Other industries are reducing carbon footprint more quickly, which will make shipping emissions increasingly visible. Shipping is no longer a service operating over the horizon and out of sight. It is seen as a carbon intensive part of the value chain for all products. As a carbon intensive industry, a meaningful and escalating carbon price would have a significant impact. Change takes time, but I would suggest that formulating a plan to mitigate this offers an opportunity to remain sustainable and competitive. ESG will also be important in meeting the challenge of attracting seafarers. A well articulated and resourced ESG strategy may increase the ability to attract, recruit and retain staff.
What are the benefits of an ESG strategy?
Demonstrating to an internal and external audience that the business is forward looking, aware of the challenges ahead and is planning how to meet them. It may become a matter of survival. Is a business positioned to play in the premier league, by investing in sustainability? Or will it sit on the fence, unsure of how to change, making it less attractive as a business partner. An effective ESG strategy could be described as an essential roadmap to a sustainable and successful future. Clearly the maritime industry is global, diverse and largely unconsolidated with no ‘one size fits all’ solution. However, the benefits of planning an individual strategy that works for you, even if this is future good intentions at the moment, is an important starting point.
Should there be a particular ESG focus for 2023?
The definition of ESG can be overwhelmingly broad, but environmental regulations, recruitment and retention aspects may be dominant. Taking carbon footprint as an example, the task is huge, expensive and time consuming. Can the cost and global availability of cleaner fuels be calculated in a way that allows investment confidence to be developed? If so, can businesses attract, train and retain sufficient core staff to see the plan to fruition? It all starts with an appropriate strategy which, by 2023, should be mature and capable of evolving as the new landscape takes shape. Major players are taking decisive steps towards sourcing and consuming cleaner fuels. Regulatory frameworks and green corridor initiatives are taking shape around the world. Shipyards and equipment manufacturers are increasingly able to offer technical solutions. Perhaps developing an effective strategy in 2023 is not as difficult as it was some years ago when the debate started.
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