The ESG landscape is changing
Stakeholder focus on sustainability is changing risk and resilience dynamics within the maritime industry. Due to increasing complexity in the regulatory environment and the fragmented nature of the global supply chain, the adoption of ESG frameworks has created an opportunity for innovative startups. By leveraging the growing production of data and the continuous advancement of technology to solve the unique challenges within the maritime industry, companies are developing and deploying ESG-focused products either as independent solutions or as an embedded component in their current offerings.
The upcoming implementation and regulation of the CII, EEXI and other emission-related metrics are expected to ramp up the need for ESG-centric solutions. Aside from environmental sustainability driving the growth of ESG, the volatility of the global supply chain has also highlighted social and governance aspects within the industry that need to be addressed. Social aspects might include the living and working conditions of crews on board vessels, and governance aspects cover areas such as lawful crew management and ethical vessel trading operations. The need for further transparency in the various facets of sustainability within the industry is where the value of ESG technology is becoming more apparent.
With current regulations pressing more on the reduction of greenhouse gas emissions, the financial benefits for ship owners are aligning with the maritime finance industry’s receptiveness to enable environmental change. The introduction of various instruments such as green finance facilities and the Poseidon Principles framework is further facilitating the industry trend to embrace environmental management initiatives and emission reduction technology solutions. This can be observed in the recent funding activity for decarbonisation technology startups such as ZeroNorth.
Originally developed within Maersk Tankers, ZeroNorth aims to optimise the operations of ship owners and fleet managers, reduce carbon dioxide emissions, and maximise profits through its data analytics and vessel reporting platform. The company’s approach to decarbonising the industry through collaboration and transparency has garnered the attention of investors allowing them to raise over US$ 50 million in their Series B funding round back in June 2022. This shows the progressive stance of the industry towards sustainability and the capability of technology to support these efforts.
The inclusion of the social component within the ESG framework emphasises the importance of seafarer welfare amidst the industry’s rapid growth and digital transformation. A report recently commissioned by the UK Department for Transport and the Maritime and Coastguard Agency focused on the mental health conditions of seafarers and recommended the integration of mental health fitness programs through various approaches such as in organisational culture management, training, and recruitment. This supports the mission of companies such as Care4C in promoting the welfare of seafarers through the use of data-driven systems and technologies.
Based in Antwerp, Care4C has “developed a platform for long-term, continuous, remote health monitoring of off-shore crew members, for controlled and secured collection and processing of health data; and for providing easy and safe access and visualisation for use by clinicians, managers, and the crew. The company collaborates intimately with major ship owners, global corporations, welfare organisations, and specialised insurers and with a team of cardiologists and neurologists.” Care4C is one of the many startups that is using technology to address the major social issues that the maritime industry is currently facing.
Complementing the environmental and social aspects of the ESG framework is the need for sustainable governance. The nature of the maritime industry requires companies to be able to strategically navigate the global landscape and the added pressure brought upon by the escalating geopolitical tensions in various areas of the world is making it even more difficult for decision makers to ensure that their companies remain competitive in these challenging times. Technology plays a disruptive role in this process as it opens up organisations to a wider range of perspectives and insights.
Windward, an Israeli maritime technology company helps shipping companies in addressing these challenges by utilising artificial intelligence in their approach to managing risks and increasing the domain awareness of the operators. This is evident in their technology being able to identify dark commercial activities and deceptive shipping practices. Through this process, companies can manage the long-term effects of their programs and initiatives and allow them to ensure the development of more sustainable organisational policies.
Managing these factors has led to the acceleration of ESG in the maritime industry. More so, it has been driven by the increasing attention from stakeholders wanting to hold organisations accountable for the impact they bring from their operations. In the process of linking technology to address these propositions, companies have transformed the value of their ESG platform from a public perception measure into a component that can be deemed critical to the long-term growth and development of every maritime organisation.
- ESG – Environmental, Social, Governance; OECD website, extracted from https://www.oecd.org/finance/esg-investing.htm
- Further shipping GHG emission reduction measures adopted; published 17 June 2021; IMO website; accessed from https://www.imo.org/en/MediaCentre/PressBriefings/pages/MEPC76.aspx#:~:text=The%20amendments%20to%20MARPOL%20Annex,effect%20from%201%20January%202023.
- Linking ESG performance to shipping finance: A game changer; PwC; accessed from https://www.pwc.com/gr/en/industries/linking-esg-and-shipping-industry.html
- Poseidon Principles; website accessed July 2022; from https://www.poseidonprinciples.org/
- Danish CleanTech ZeroNorth Raises Over $50 Million Series B Round to Help Decarbonise Shipping, published 2 June 2022, extracted from https://www.psgequity.com/news/danish-cleantech-zeronorth-raises-over-50-million-series-b-round-to-help-decarbonise-shipping
- Understanding seafarer suicide and its potential under-reporting, UK Department for Transport, Maritime and Coastguard Agency, published 12 June 2022, extracted from https://www.gov.uk/government/publications/understanding-seafarer-suicide-and-its-potential-under-reporting
- Care4C, website accessed July 2022, extracted from https://www.care4c.com/
- Dark activity & deceptive shipping practices – Russia-Ukraine summary, Windward website accessed July 2022, extracted from https://windward.ai/resources/dark-activity-deceptive-shipping-practices-russia-ukraine-summary/