In recent years, shipping company disclosures have expanded to include ESG (Environment, Social, Governance). For companies with shares listed in the U.S., these disclosures are moving beyond the requisite business disclosures and financial filings required by regulators.
Indeed, companies in U.S. listed markets are now studying potential new disclosure mandates from the Securities and Exchange Commission. For non-listed private companies, ESG disclosures are completely voluntary. As more shipping businesses seek to report on their efforts, I wanted to look at the “state of the art”, starting with a “compare and contrast” exercise between reports from two companies I am familiar with. Crowley, a privately-held U.S. icon in the maritime industry, released its “Sustainability Report,” a splashy 73 McKinsey-esque page report on a much broader overall ESG positioning, two weeks ago.
Earlier this year, MPC Container Ships, an Oslo-listed owner of vessels serving regional and feeder trades, has issued its more modestly presented, but perhaps more correctly titled, 2021 “ESG report” (28 pages- its third annual report; such reporting is required for companies listed on the Norwegian bourse).
In both companies’ reports, matters covered include governance, and, closer to home for gCaptain readers, the human side of the business. MPC notes the importance of the “Neptune Declaration” – a seafarer repatriation initiative borne out of Covid-related difficulties. Crowley, well known for its efforts in providing a lifeline to Puerto Rico during the pandemic, talks about its “safety culture” which was integral to its overall functioning and responsiveness during 2020 and 2021.
In my view (which, admittedly, could be considered short-sighted), “sustainability” is about emissions, the “E” in “ESG”. With my eyes looking for quantitative disclosures of emissions, I found one page in the Crowley publication (p.39) with numerical data- comparable to that provided by MPC (spread out in microbursts on pages 12, 13 and 14, with more detail on page 21). For both companies, 2021 saw more emissions than 2020, as Covid-recovery trade surged.
Importantly though, Crowley takes a crack at measuring the all-important Scope 3 emissions, which include “all of the emissions a company is responsible for outside of its own walls—from the goods it purchases to the disposal of the products it sells,” a definition taken from World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). The SEC rules, mentioned earlier, would require listed entities to estimate Scope 3 emissions, if they are enacted in a form similar to the agency’s end-March, 2022 proposal.
There are no precise templates for ESG reveals, but MPC’s disclosure illustrates the wide array of methodologies driving the report contents. In discussing its 2021 report, the Norway-based containership owner notes that: “Our second ESG report, published in March 2021 and covering calendar year 2020, includes disclosures which meet the Norwegian Shipowners’ Association’s reporting requirements and the Sustainability Accounting Standards Board’s (“SASB”) Marine Transportation Standard. Material topics included in the report are selected based on stakeholder feedback and an analysis of the significance of the impacts for each topic. Our approach to determining material topics is aligned with the Global Reporting Initiative (“GRI”) Standards’ materiality principle…As an Oslo Stock Exchange-listed company, we follow the Euronext guidance on ESG reporting of January 2020. The Euronext reporting process is based on the GRI Standards.”
Crowley follows the GRI, and devotes seven pages (pp. 66-72) of its publication to simply matching up GRI requirements with the content in its report. MPC links the contents of its report to the SASB (pp. 21-22) and also to the GRI (pp. 24-25).
The past two years have seen shipping move into the spotlight, with the “supply chain crisis” generally and, more recently, shifting cargo flows resulting from the war in Ukraine. In coming years, social media will grow exponentially in importance; conventional channels of press releases and regulatory “disclosures” will continue to become components of larger communications strategies. Individual companies will need to craft their own business-specific messaging, separate from those of larger “coalitions” that have sprung up in the past few years (and mentioned by both Crowley and MPC). The two reports here show that this process is well underway.
While I would prefer to leave the McKinsey-like styling out of such efforts, the folks at Crowley clearly “get it” in a big way. Their attention-grabbing style of outreach (presumably to charterers, and also, my guess, to a broader audience and pool of future talent, with a far broader definition of “sustainability” than mine) portends a direction that may be emulated by other shipping enterprises.
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