A study on Sustainability Report of Container Shipping Companies.
Capt Tapas Majumdar
13 Mar 2022
Recently had a request from a friend of mine to share my thoughts on the Sustainability Reports in the container shipping industry. The idea was exciting because it came with the promise of an intellectually stimulating research. So, I decided to pursue it by randomly picking up sustainability reports of 10 container shipping companies. The findings were interesting, and I decided to write. This is the first of my blogs on this subject.
Given that shipping is an industry is sure to stay when I look at it from a ‘need’ point of view as an enabler of global trade. It’s integration with nature, well really… how do you integrate with it, when you are born in it? That makes the industry stake a higher ground on being responsible, their long term existence depends on it. Remember the story of the man who was gathering wood for his family, and happily chipping off the very branch he was sitting on. Inaction or inadequate action mount up to to what signifies chipping off from the very branch that you are sitting on.
I do not claim that the random reports picked up by me are representative of the size of the industry. It is random and I am looking for patterns in randomly picked report, if that sounds crazy enough, come along.
After random ten samples were picked up, I reviewed each one of them and here are the top 3 trends.
Is the discussion on Materiality happening in full?
The intention of disclosures in a sustainability report is not to expose the vulnerability of a business. But it is to acknowledge the vulnerability that exists and details the plan to deal with it and report on the progress. A plan that is the outcome of a detailed application of mind, by those minds that matter.
Excluding one report where the company published the materiality matrix no other company had published one. The other nine made a reference to it, in terms of a ‘mention’ sprinkled across the report. Strangely, all companies spoke about health and safety, but struggled to find 3rd party contract identified specifically as a material aspect and integrated in the reporting robustly.
Materiality discussions, in greater details are important and is a strong indicator of transparency. Not every material factor can be addressed by the company, it may choose who address a limited number of material factors instead of addressing all material factors, by giving reasons. Not identifying them in full (as much a possible) defeats the purpose. Every industry has material factor that impact them, if you are part of the industry most of those factors will impact you as well. This is known.
So have a detailed discussion with the right stakeholders and detail the Materiality Map. Have a plan to address them and then publish them. Let the discussion be on what needs to be addressed now or later, but not why was an important fact not included in the materiality matrix. That is credibility of the report sinking in shallow waters.
Alignment to Business
The alignment to business is an important aspect of was sustainability report. Sustainability report is no longer merely a marketing tool, it is also a marketing tool, but it is a strategy document. Now when I say it is a strategy document it becomes fundamental that there is a policy there is a plan of action and that there are deliverables which can be verified. All of this must align to the business goal itself. We at ‘The Sustainability Practitioners’ believe that business will purposefully engage in activities that have environmental impact when the impact also benefits the business. Going by this belief, three out of 10 reports clearly identified the impact of the initiatives in terms of the impact on the P-n-L of the company.
Having alignment to the SDGs is important but, in my opinion, it is not adequate. Quantification of the intended impact (targets) on environment and business, tracking of the progress, framework of data capturing including data source and manipulation methods of data and reporting formats, are important and must be published.
Is the report based on principle?
We have frameworks starting right from the UNGC to GRI, SASB and all the others, that are based on certain principles. These principles are integral part of the model or the framework that the company is using to report. The framework has its own inbuilt logical approach that in turn defines the very purpose for which the framework was built. If you're reporting does not align to the principles it will not align to the framework and will not achieve the purpose, for which you are reporting.
Also consider, how do you prove that you are being compliant, mere statement does not imply compliance. This is an important question. 1 of 10 reports claimed that “we Support UNGC”. The report section was well articulated around it. A statement is intent, evidence that can be verified is the true indicator of commitment and delivery on the intent.
if I say that we support the UNGC, how do you back up the claim? How will the 3rd party validate that you really support? This is not a simple question to address, answer to this complicated question is a must. However, most of the companies have not made any significant effort to address it in their report. Like UNGC principle 1 & 2, is on supporting human rights, while in general we understand ‘yes’ we need to support human rights. Taking a contrarian view, can the company state that it does not support human rights and that I am okay with human rights violation. A mere statement that you are compliant to Human Rights is not adequate. The 10 reports evaluated do not reflect any attempt to prove the commitment.
Keeping the report Principle focused facilitates effective reporting. Ensure that your data and information do not raise more questions relating to the adequacy or clarity of data or information. Let the discussion be on the information derived out of the data and how it can be bettered.