Cross-industry demand for ESG reporting impacts shipping
An increased call for Environmental, Social and Governance (ESG) reporting has led to more shipping partnerships and a greater drive for data verification and standardisation.
19 May 2023
As cargo owners are under more pressure from investors, stakeholders and customers to decarbonise their supply chains, there is a greater demand on shipping to provide ESG reporting.
This is illustrated by S&P Global data, spanning 2018-2022, which shows that out of a record-high 1,026 investor activist campaigns launched across a range of industries in 2022, ESG components accounted for 81% of these.This is the highest percentage in the last five years.
As ESG becomes essential to shipping, there is a greater requirement for data trust. DNV business development leader Carl Erik Høy-Petersensaidin a feature on DNV’s website that this means “verification of the most important ESG KPIs is becoming increasingly important”.
He gave an example: “We see that more cargo owners and charterers require third-party verification, e.g. of voyage emissions for their cargo as this goes into their greenhouse gas reporting on Scope 3 emissions.”
Law firm Watson Farley & Williams’ The Sustainability Imperative – Part 2 report, released in March, shows that ESG joint ventures are on the rise among ship owners.For the first report in 2021, two-thirds of those questioned said they would like to form partnerships and now, 56% are in an ESG-linked tie-up.
Shipowner and technology provider partnerships are “usually a strategic play in part driven by a wish to share technological risk and first mover risk”,the authors said.
On growing shipowner and private equity (PE) partnerships, they said: “There is a rise in PE players that have mandates to fund ESG related projects. This includes infrastructure funds that are increasingly including shipping assets.”
ESG reporting is expected to move from focusing more on the ‘Environmental’ to ‘Social’ and ‘Governance’ aspects as well. “We would expect to see in the coming years a larger focus, especially in areas of crew welfare and promotion of diversity in operating staff and crew,” the report authors said.
In an example of how sectors other than shipping are making ESG reporting a key focus, Accenture has established its‘360° Value Reporting Experience’, bringing all of its ESG metrics, progress and performance into one place.The information and technology services and consulting company said this involved “transforming”its approach to reporting by focusing on the information needs of stakeholders and providingclear and transparent disclosure across ESG frameworks.
The hub was created by establishing a governance model and a steering committee to execute on its reporting strategy. It alsocreated a dedicated ESG team. Additional frameworks for ESG reporting were added: the Sustainability Accounting Standards Board; the Task Force on Climate-related Financial Disclosures; and the World Economic Forum International Business Council metrics.
Accenture highlighted the benefits: “The launch of this digital reporting hub achieved clear, consistent messaging around all our reporting, heightened the user experience and streamlined the creation and sharing of key data across all our reporting.”