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3rd meeting of the BIMCO ESG Network highlights the administrative burden of increasing requests for ESG data and information
Published: 19 October 2023
The 3rd meeting of the BIMCO ESG networked delved into the issue of standardising data and information on ESG parameters – shining a light on the ever-increasing volume of and diversity in requests from customers and other stakeholders.
The BIMCO ESG network continues to grow – we now have more than 60 of our members represented in the network. Each new member brings a new perspective to the table and enhances the discussion. New topics raised at this 3rd meeting including how to consider pollution levels and habitat destruction in ESG strategies, how to factor in aspects related to end-of-life of ships and recycling as well as how to consider crew wellbeing and aspects related to human slavery.
Ship repair, as well as pollution clean-ups, were mentioned as specific examples of topics that need to be to be explored further and where owners (and other stakeholders such as insurers) might be exposed to risk. For example, where there is a case where essential repairs need to be done in a timely fashion, the owner is open to risk if they are unable to visit a repair yard or to ensure that it is aligned with the ESG values and goals of the company.
Development of an ESG index for shipping
The meeting welcomed the network’s first guest speakers with Dr Stavros Karamperidis, from the Plymouth Business School, UK and Dr Michael Tsatsaronis from the National and Kapodistrian University of Athens, Greece presenting. They introduced their research work on ESG which has been supported by several BIMCO members. The result of the research work is an index is based on detailed analysis of 70 public ESG and sustainability reports from shipping companies and aims to assist shipping companies in drawing up accurate and measurable ESG profiles to meet upcoming stricter ESG reporting requirements.
Their presentation highlighted the assorted reasons that companies may wish to develop ESG strategies and reporting. This included that:
- Companies can be provided with a competitive advantage
- It might eventually become a licence to practice with increasing regulation
- Sustainability affects financial performance and credit risk and that the implementation of ESG practices can be associated with company's potential capacity to access finance – investors are now incorporating ESG into their investment decision-making
- More generally- and particularly when it comes to consumers- everyone wants to see the sector being more sustainable.
The presentation highlighted that there are complexities in shipping that mean that it is hard to compare one company’s performance against each other - especially when much is measured on a ship level. And whilst environmental indicators can be relatively easy to measure the social and governance aspects can be much more difficult. An additional challenge going forward will be to ensure that any shipping indicators align with existing frameworks that are either voluntary or mandatory. The existing voluntary frameworks were described by the group as both a jungle and a minefield highlighting that standardisation is key - and that a range of different scoring methods was not helpful for the industry.
What is keeping members awake at night?
One of the biggest issues facing members is the volume of questionnaires being received from shippers and clients each asking for an increasing amount of ESG data and information. This includes but is not limited to companies aiming to establish their scope 3 (ie supply chain) emissions and so needing to include any transportation or shipping costs of products. For each questionnaire, the formats are tending to be different – with requests made for data via a survey tool, by fillable PDF forms or to be provided in Excel or in Word. The questions – whilst often attempting to determine the same answer – are asked differently, require answers in a different way or use different units of measurement. This creates a significant bureaucracy burden and there is an urgent need to streamline this data collection and reporting. Furthermore, gaining buy-in from stakeholders to accept the information in a single format is crucial.
This issue will be explored in a future session of the group. Any members wishing to contribute are warmly invited to get in touch.
