Second meeting of the BIMCO ESG Network explores the challenges of developing an ESG strategy

Published: 28 June 2023

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Membership of the group is now up to 48 and increasing, which shows that BIMCO members see this as a growing area of concern.

The drivers behind developing an ESG strategy were discussed with a focus on the future of the workplace. It was noted that young people are now often in a position to select employers – not the other way around. The people a company might want as management trainees are much more socially and governance-aware than the generation before them, and are likely to gravitate towards companies that can demonstrate credentials in this area.

And priorities are changing - decarbonisation was not really on the agenda of many companies 15 years ago yet now dominates many discussions. The challenges of decarbonisation can dominate the “E” of ESG, but this and other changing priorities require solutions that in turn require talent and innovation. Recruiting talent, getting the best people, providing people a voice and encouraging a creative culture suggests a need to also focus on the “S” of ESG. Making innovation sustainable needs development plans and emerging challenges such as AI require governance if not regulation.

In brief, topics discussed included:

• Start with the basics – be consciously aware of what your organisation does, what is relevant and where you want to go. Be mindful to seek and allocate resources and training to invest and evenly balance each component (E, S and G)
• Direction should come from the top – there needs to be an understanding that it is going to cost money to meet both regulations and go above and beyond.
• ESG strategies should be cognisant of the fact that “you cannot manage what you cannot measure” – from greenhouse gas emissions through to number of cases of harassment. It can be challenging to set targets for things that are not easy to measure such as seafarer wellbeing.
• Where the stakeholders are the shippers – there is an increasing need to provide information on ESG. Companies are seeing multitude of questionnaires from different companies, with hundreds of questions and topics such as child labour, modern slavery covered.
• Existing guidance and standards are useful for any ESG exercise. Standards available from ISO, the GHG protocol and the UN Sustainable Development Goals (SDGs) impact programme. The Global Reporting Initiatives (GRI) standards may be the most relevant but can take several years to simply become familiar with.
• Shipping-specific standards need to be developed- although there is progress in this area with the tanker sector being most advanced.
• Data on ESG can be found across all virtual siloes in a company, so companies need to collect data in an intelligent way - within clearly defined operational boundaries.
• Using an external independent verifier can be advantageous as they will as questions that you might not consider and will seek demonstrable proof. With a rise in standards expected external audit can identify what might be green and blue washing.
• Change management may be required from leadership. ESG can be a hard concept. Embracing the work of other departments within a company and matching stories to interests and objectives is a tactic. Use a breadth of sustainability communications - newsletters, small working groups, town halls, podcasts etc and give people a change to speak.

Developments in the EU will change the way in which ESG elements are reported in Europe and by European companies. This, driven by the Corporate Sustainability Reporting Directive (CSRD) Directive, will form the basis for a special meeting of the network later this year. Under the CSRD sector-specific reporting standards could be agreed as early as June 2024 with reporting from companies included under the directive starting as early Jan 2026. Additional topics to be covered at future meetings will be data collection and management and external audit and assessment.

We welcome all enquiries from members regarding membership of the network - please don't hesitate to get in touch!