The push of ESG data is coming to the maritime industry

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Posted on September 29, 2021 at 10:31 p.m. by

Carole Plessy

The corporate world is increasingly linking profitability and sustainability to environmental, social and corporate governance (ESG) criteria, and the shipping industry can expect both challenges and advantages.

The ESG push is coming from financiers, insurers, regulators and customers: powerful companies like Amazon, Unilever, HP, IKEA and many others. There is no still rest; either shipowners and operators embrace the implementation of effective ESG strategies and the opportunities they present, or they risk being squeezed out of the industry. And if ESG sounds like greenwashing, consider this: Global ESG assets are on track to exceed $53 trillion by 2025, representing more than a third of the $140.5 trillion in projected total assets under management, according to Bloomberg Intelligence.

So how can the shipping industry act and how does it build the data constructs that will be needed to demonstrate its performance over time? On a talk show during London International Shipping Week, satellite communications company OneWeb sponsored a discussion of these challenges with a panel of experts representing the views of shipowners, insurers and innovators.

As KD Adamson, host and leading futurist, pointed out, we choose and prioritize data that we consider relevant to our view of the world. “It matters because what we value is intrinsically linked to what we measure, and until now financial data has dominated, tied to economic, environmental and societal assumptions and priorities that date back centuries. These priorities are changing and new non-financial metrics, from the Human Development Index to measuring the Ecological Footprint and resource circularity, are giving us a completely different view of the world,” Adamson said.

Investors, banks, consumers, and even employees are beginning to demand credible, standardized information to support long-term assessments of decarbonization, resource scarcity, talent management, data security, crew well-being, diversity and business ethics. She says we are entering an era of “radical” transparency that will lead to “infectious accountability” rather than just top-down regulation.

Panelist Anthony Gurnee, CEO of Ardmore Shipping, recalled a quote from a strategy professor who predicted that in the 21st century, for businesses to succeed, they will need to scale the twin peaks of economic performance and societal progress . “We are seeing generational changes, and to attract the best talent and get the most out of them, you have to have a new approach. We are very happy about that,” he said.

Additionally, he pointed out that since ESG is a set of external metrics, companies will naturally perform better when they have the right philosophy and culture in place to achieve it. For example, a company with a progressive culture that emphasizes performance improvement across all ESG areas such as environmental performance/decarbonization, crew well-being, leadership and team diversity, and state-of-the-art governance, will achieve more than an organization trying to modernize its conduct. to meet specific criteria.

Panelist Amy Barnes, head of climate and sustainability strategy for insurance broker and risk advisor Marsh, noted that the financial world is working at a faster pace than the IMO’s 2050 targets as they are concerned by stranded assets, while taking a close look at their portfolio’s contribution to climate and sustainability. Insurers have a similar goal: net zero underwriting. “I can’t tell you exactly what data is important, but being ready for data is critical because everything is changing at a faster rate than many of us anticipated,” she said. Shipping cannot rely on the IMO to prescribe action, as needs and opportunities will be dynamic and driven by activities on land as much as at sea.

As panelist Roberto Coustas, CEO of maritime AI tech company DeepSea, reminded us, solutions won’t just come from collecting big chunks of data and deciding what’s useful next – in fact, it is counterproductive. He suggested that to start, companies should focus on the data needed to create value – a view that was corroborated by other panelists. Vessel operators and managers should start with smaller datasets and use them to test hypotheses or inform ideas. At an industry level, to create some consistency, it is expected that at the outset, the ESG measures required could be relatively simple as an initial basis for the first comparisons.

That’s not to say big data is the enemy. It’s a necessary part of the solution, but knowing what to do with the data is important. The ability to sort data and curate it to extract insights will be what differentiates industry leaders from those who struggle with opaque and cumbersome data sets. Going forward, this will only gain momentum and we are already seeing machine learning and AI solutions playing a game-changing role in areas such as vessel optimization and sanctions risk mitigation. – contributing to the E and G of the ESG.

ESG success requires a long-term view. Although the pressures are imminent, it’s a marathon, not a sprint. Boards of directors, whether independent, listed or family-owned, must take a long-term view and ensure that ESG strategies are integrated into their broader corporate strategy. It needs to be top-down driven as much as it needs to be a collaboration between value chain partners.

While being at the heart of these complexities, it can be difficult to recognize the potential that ESG-related performance improvement can bring. Those who succeed will be in a better position to secure investments, talents and customers. Ultimately, by positioning ships as data-driven platforms of opportunity to create more financial and societal value, ships have the potential to elevate their role within commerce and communities.

Carole Plessy is maritime manager at OneWeb.

The opinions expressed here are those of the author and not necessarily those of The Maritime Executive.