We are pleased to host an exclusive interview with Mr Bjørn Kjærand Haugland, co-founder and Chief Executive Officer of Skift Business Climate Leaders which is a Norwegian business-led climate initiative with a mission to accelerate the transition to a low-carbon economy and support the government in delivering on its national climate commitments by 2030.
Mr Haugland enumerates the key areas that should be on top of the ESG agenda and highlights that a new generation leadership with more gender equality and competence on the field of ESG will make the difference.
Bjørn Kjærand Haugland: Shipping faces a wide variety of ESG risks through the entire value chain. The list below highlights the most critical ESG issues from a global perspective. The 13 areas cited below should be on top of the ESG agenda for the shipping industry in the next five years:
Environment:
- EMISSIONS, GHG emissions, and the ability to meet stricter climate-related regulations, concern over air pollution emission from ships, including Nitrogen Oxides (NOX), Sulphur Oxides (SOX), and Particulate Matter (PM) in harbour areas.
- CLIMATE RISK the fleet’s preparedness to meet harsher and more unpredictable climatic conditions and stricter requirements.
- RECYCLING Reputational damage due to recycling taking place on the beaches in southeast Asia, where the health and safety of workers are not respected, and environmental protection is lacking.
- BIODIVERSITY AND POLLUTION transfer of invasive species through ballast water, impacts on marine life from anti-fouling chemicals, and insufficient on-board waste management.
- ACCIDENTAL SPILLS AND EMERGENCY PREPAREDNESS Financial markets are concerned with environmental damage from accidents.
Social:
- FORCED LABOUR Several cases of forced or compulsory labour have been uncovered in the recent past years, particularly involving migrant workers.
- SECURITY Shipping routes in high-risk areas require a greater focus on security practices.
- DIVERSITY Shipping is a male-dominated industry with limited opportunity for women and non-Western crew to advance.
- HEALTH AND SAFETY There are approximately 6 fatalities per 100 million work hours on board ships (excluding fishing) per year, which is 10 times the OECD average for all industries.
- LABOUR RIGHTS Extensive use of temporary employment agencies and short-term contracts weaken worker’s rights and their ability to organize.
Governance
- POLITICAL ACCOUNTABILITY Controversy over the industry’s supranational nature means it often escapes enforcement of national regulations and international agreements.
- TAX TRANSPARENCY Tax transparency and tax liabilities, the use of tax havens, and tax evasion.
- ANTI-CORRUPTION Shipping is highly vulnerable to corruption and the demand of facilitation payments.
S4S: What are the key barriers that the maritime industry is currently facing with regards to ESG? What are your suggestions to turn these into opportunities?
B.K.H.: The barriers are:
- Finding the Right Framework
With SASB, TCFD, GRI and beyond, the proliferating array of ESG acronyms and frameworks have left much confusion and ‘analysis paralysis’ in their wake. Without standardized metrics, it’s difficult for investors to evaluate companies. Equally, it’s challenging for companies to know where to invest the considerable amount of time each framework demands.
- Measuring and Tracking Performance
‘You can’t manage what you don’t measure,’ states the classic adage. Yet many ESG principles have historically lacked common definitions and metrics. To complicate the challenge even more, many ESG issues span organizational functions and departments.
- Accessing Governance Data and Insights
As investors begin to shine a brighter spotlight on ESG, benchmarking becomes even more important. Companies must not only track their performance against ESG metrics but know how they stack up against competitors and peers. Companies need to identify red flags and discrepancies — and take corrective action.
Collaboration within the whole value chain is the key to turn these barriers to opportunities. Systemic changes require that all stakeholders are involved.
S4S: In your view, has our industry realized the importance of ESG? What should be the next steps towards an ESG-ready industry?
B.K.H.: I am today working across different industries and I believe the global shipping industry still has way to go in order to realize the importance of ESG. Next step should be a clear tone of voice from the top -from the CEO’s of the main companies- industry association supported by a specific initiative to move the whole industry forward. This includes competence building on all levels in the industry.
S4S: How maritime industry can actually address all ESG requirements? What are the lessons learned from other sectors?
B.K.H.: The key is to encourage all companies to do baseline studies, set goals and targets and collaborate to build strength and speed of implementation
S4S: How will new trends, technologies, concepts and innovation influence our long-term ambitions and the way we achieve them towards ESG?
B.K.H.: The main trend and enabler will be technology platforms that will drive transparency in the whole value chain. Key focus should be digital transformation.
S4S: How do you expect ESG issues to evolve for the maritime industry in the coming years?
B.K.H.: I am optimistic. The pressure will come from the society at large through customer demands. ESG will be a main driver to build competitive advantages.
S4S: If you could change one thing in the industry to boost ESG awareness from your perspective what would it be and why?
B.K.H.: A new generation leadership with more gender equality and competence on the field of ESG. Commonly cited benefits of gender equality in leadership positions include: better decision making, better problem solving, effective challenges to traditional mindsets, and enhanced organizational communication.
S4S: What is your key message to industry stakeholders towards sustainable shipping?
B.K.H.: Take global leadership in the transition to a safe and sustainable future! With increasingly stretched land-based resources, we all depend on ocean industries to supply a growing world population with enough food and energy. At the same time, these industries must themselves strive to become more sustainable. All companies should understand the broader environmental and social consequences of their business operations and continuously evaluate risks and opportunities. The shipping world needs leaders who are the opposite of the old “company man” who coldly maximizes profits, and who instead embrace being more vulnerable, open, caring, empathetic, and human. A company will thrive when it has leaders courageous enough to challenge business as usual — leaders who understand that profit should come not from creating the world’s problems, but from solving them. Willpower comes from cultivating leadership principles, such as purpose, humility, and courage.
The views presented are only those of the author and do not necessarily reflect those of SAFETY4SEA and are for information sharing and discussion purposes only.
Reprinted with permission from SAFETY4SEA.
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