Corporate social responsibility and sustainability policy is about building and maintaining a corporate reputation. Craig Jallal examines how best to achieve this
Corporate Social Responsibility (CRS) is the term used to describe policies that ensure companies conduct their business in a way that is ethical. This means taking account of the social, economic and environmental impact of the company’s actions, and consideration of human rights. In shipping, this can be extended to cover environmental protection, support of marine life, anti-bribery and corruption, antipiracy, cyber security and prevention of terrorism. The visible corporate face of CSR can involve a range of activities, such as:
Sustainability is the related issue of minimising wastage and trying, where possible, to produce goods and services in a way that does not directly or indirectly harm the environment.
As shipping is concerned, there is no legal or IMO regulation requiring shipping companies to have a CRS or sustainability policy As Julian Clark, global head of shipping for maritime legal specialist Hill Dickinson explains:
“While it is true that one cannot point to a single legal document or regulation imposing compliance with the concepts of CSR, one does not have to look very far to find a vast range of obligations which can be addressed and protected against by an efficient CSR policy. It is no doubt partly for this reason that all of the world’s major shipping corporations, particularly those in the tanker sector, actively support CSR, often by creating posts with specific CSR responsibility and departments that can develop and implement appropriate procedures.”
Julian Clark (Hill Dickinson): There is no single law or regulation imposing compliance with the concepts of CSR
Indeed, all the oil majors and the largest tanker companies have a CSR and sustainability policy and take this role very seriously. Shell produces an annual report, in the 2017 version of which the company outlined its approach to sustainability and covered the company’s social, safety and environmental performance. It establishes how Shell is playing a role in energy transition and details Shell’s contribution to society, which includes providing people with access to energy products. The report points out the company also contributes through paying taxes (although this is of course a legal requirement), procuring local goods and services, hiring locally and supporting social investment programmes.
Shell chief executive Ben van Beurden said: “Sustainability is essential to the way we do business. Our Sustainability Report is an account of our progress in this area as we continue to deliver [the] energy products society needs in the transition to a low-carbon world.”
Shell also goes one step further and produces an annual report on its payments to foreign governments. This is one way of covering the aforementioned anti-bribery and corruption. This report details payments in 29 countries where Shell has upstream operations and is prepared in accordance with the UK’s Reports on Payments to Governments Regulations 2014.
Ben van Beurden (Shell): Shell details its payments to foreign governments
Tanker operator Teekay takes a slightly different approach, which highlights the different interpretations of CRS and sustainability. In the latest available Teekay sustainability report, the emphasis is on safety. President and chief executive Kenneth Hvid said that sustainability is about focussing on safety: “We put safety first. No compromises. We look after each other and make sure everyone gets home safely. We consider people, planet and profit in all of our decisions and actions.”
Teekay undertakes a number of CSR events each year. These include the White Ribbon Campaign (preventing violence against women) and the Annual Kiltwalk Event (where staff from the Glasgow office walk 26 miles in traditional tartan kilts), among other events.
MISC/AET take a different approach to this issue again. The MISC/AET annual sustainability report defines the concept as six pillars of business awareness encompassing customers, shareholders, governance & business ethics, employees, environment and community. The report is prepared in line with the Global Reporting Initiative (GRI) G4 Guidelines for sustainability reporting, and lists 477 development initiatives undertaken by the company, including a reduction of 91% of non-shipping scheduled waste recycled annually and a 19% reduction in freshwater consumption on the company’s ships.
The UN is one of the global platforms driving sustainability. The UN's Sustainable Development Goals (SGDs), agreed at an historic summit at the United Nations in New York, came into force in 2015. It saw the creation of the 2030 Agenda for Sustainable Development, which contains the 17 agreed SGDs encompassing issues such as poverty, gender equality, sustainable communities and clean energy.
SDG 12 focuses on 'sustainable consumption and production patterns' and states that there "should be a systematic approach and cooperation among actors operating in the supply chain, from producer to final consumer."
Implementing SDG 12 requires radical steps. US supply chain management company, CNH Industrial, has initiated an assessment of potential suppliers’ sustainability credentials. The company monitors its existing suppliers through a specific assessment process based on self-evaluations and audits. This activity is performed annually, involving a group of chosen suppliers with the aim of gradually increasing the number of participating companies year-on-year. The supplier’s risk classification, deriving from previous assessments, is the trigger for eventual follow-up sustainability audits. Potential improvements and implementation activities are identified in the form of specific action plans which are developed together with suppliers.
Supply chain managers CNH Industrial feels that Supplier Sustainability Self-Assessment (SSSA) is not only a tool for monitoring performance, but is also a way of promoting continuous improvement and encouraging good sustainability practices.
According to CNH Industrial, in 2017, 75 audits were carried out and 28 suppliers were involved in nearly 210 action plans for improvement. The audits focused on four key areas: environment, labour practices, human rights and impact on society.
In June, Lloyd’s Register (LR) become a founding member of the UN Group for Sustainable Ocean Business. The United Nations Global Compact Action Platform for Sustainable Ocean Business was launched on 8 June, World Oceans Day, at the UN Headquarters in New York.
The Action Platform recognises that long-term ocean well-being is critical to ensuring societal well-being and a common resource with a significant potential to create more sustainable food, energy, transport and minerals for a growing world. The three-year, intensive programme convenes leaders in ocean industry along with the UN, world governments, academia and civil society to work towards the sustainable use of the oceans.
Lloyd’s Register chief executive Alastair Marsh said “LR will use our influence to encourage leading businesses and organisations to take action now with regards to our ocean’s health. Ocean sustainability challenges have inherent commercial risks, as well as large opportunities. It is in all of our interests to help stabilise its health. In addition, we strongly support the 17 UN Sustainable Development Goals (SDGs) and believe that this platform will help get us further to creating the future that we want.”
One might think that the level of examination required, as exhibited by CNH Industrial, would be a deterrent in shipping, but Capital Maritime & Trading was the first shipping company worldwide in 2014 to receive independent verification and certification by LR of shipping for its business strategy, in accordance with the "IMO Strategic Concept of a Sustainable Shipping Industry".
Capital Maritime & Trading incorporates key imperatives and goals, as defined by IMO, in the company's management systems across its operations. Capital has established a task force to implement specific actions, plans, processes, and to develop systems addressing sustainability. Priority has been given to the promotion of a safety culture and environmental stewardship, as well as to the education, training and support of seafarers. Additionally, the strategy encompasses a drive to reduce the energy required to operate and explore and evaluate the potential of alternative marine fuels, particularly LNG.
Capital Maritime & Trading chairman Evangelos Marinakis said: "Capital Ship Management strongly believes that the benefits of lower SOx, NOx and, potentially, reduced greenhouse gas emissions makes LNG as a marine fuel an attractive option. We think that competitive LNG pricing and an adequate global LNG bunkering infrastructure could be a reality within five to 10 years. We want to be ready and we welcome the broad support that our partners LR and DSME can provide in helping us develop more sustainable shipping solutions."
Given these examples, and the wide ranging facet of CSR and sustainability, should there be a legal requirement on shipping companies?
“I for one would strongly caution against imposing yet more regulation on an industry drowning in the range of legal obligations placed upon [it],” said Hill Dickinson’s Mr Clark.
“Does CSR have an important legal role to play in minimising risk and protecting against legal infringement? Absolutely yes. The future of shipping, the inevitability of automated vessels and the changes that this will bring in relation to manning and operation, combined with the growing threat of cybercrime and international terrorism in the shipping sector mean that those tasked with developing effective CSR procedures are the gatekeepers for the continued development and advancement of one of the world’s most essential and safe transportation systems.”