ESG in the shipping industry

When it comes to ESG (environmental, social, and governance criteria), most people in the shipping industry tend to focus on the environmental aspect, such as how to improve your organisation’s sustainability or optimise fleet fuel consumption.

There is less understanding about the equally important social or people aspect of ESG.

In a recent interview with Riviera, OTG Chief Creative Officer Raal Harris  explained how the social element of ESG can contribute to the creation of an effective, impactful workplace culture by:

• aligning people across the organisation with shared goals and outcomes
• creating values that are actionable and motivate your workforce and stakeholders
• helping to inform daily business decisions, from CEO to seafarer

Much has been said about the crewing crisis we are experiencing, and Raal believes that ESG can help shipping address this.

“While you may not anticipate prospective seafarers looking at the ESG credentials and energy reports of your company, the values and the reputation of companies are fast becoming a major factor in choosing a new employer, particularly for younger generations.

Leaders must analyse and implement the values you want your organisation to live by, and then actively communicate those values and the steps you are taking to achieve them to all your employees. These aren’t just values that are printed on a mouse mat or marketing material, but are actionable on a daily basis.

Taking your commitments to ESG seriously, communicating them effectively and demonstrating the clear steps you are taking to achieve them will not only help you attract the right candidates but retain them too.

The cost of failing to retain good candidates and keeping skills and experience within your company is extremely high.

Demonstrating daily how you effectively manage your environmental and social impacts and governance mechanisms is increasingly important, not only to attract investment but to keep your existing and prospective employees engaged and committed to your organisation.

Seafarers in particular, we know, share a lot of information about their employers and those getting ESG right will be seen as an attractive company to work for.

You can then help retain candidates by listening to their concerns, reflecting them in your ESG criteria and setting out career progressions and pathways that will set you apart from the rest.

How does ESG help build competitive company cultures?

The values and ethics you communicate become the framework of how people live and work together – that’s the ‘Social’ aspect of  ESG.

If you want to influence people’s behaviour, you have to get a deeply embedded culture in place. This is no easy challenge in the maritime industry, where you may have micro cultures spread out across your international organisation – different regional offices, and crews at sea all from different cultural backgrounds.

Accept that there will be differences and carefully onboard people into the organisation, making sure that you are clear and communicate from the top down. Every level in your organisation, from intern to CEO should understand and function according to your company’s core values.

The more that people can hear from the top of their organisation that these are the principles of the company they work for and see it in action every day, they will have evidence that you believe in the things you are telling them and there is a good reason to do the things you’re asking them to do.

Is ESG likely to impact your company’s financing, recruitment & sales?

The purpose of ESG reports is to help financial institutions, key stakeholders and customers to determine if you are meeting the core criteria that you claim to be and that is important to their own moral, ethical and business considerations.

Stakeholders

An ever increasing number of consumers make decisions on where they will spend their money based on whether the values and ethics of a company are aligned with their own.

Equally, businesses are also choosing to work with companies and individuals that are in alignment with their own values and that will not jeopardise the relationship to their customers.

People are more likely to choose suppliers who have a stronger ESG regime because that will help them with their own reporting.

We’re seeing across the world, particularly in some of the new generations coming through, that they need to feel that their values are in alignment with the businesses that they work for, and it’s actually showing in workplace surveys how this is ranking higher than even the compensation. This then becomes crucial to getting a good ESG performance.

While some companies and people have advanced health and welfare, we must also acknowledge that the issue is far more complex and involves multiple factors. For example, an industry maritime has a long way to go in terms of diversity.

These are issues that are increasingly important and are likely to be much higher up on the agenda long term.

How will ESG be documented?

Transparency is key.

Although ESG is often reduced solely to its financial and environmental aspects, there are immense benefits to be had by considering how ESG can be a tool by which to craft more successful company cultures within maritime.

Companies should be thinking about the organisation that they want to be and the picture that they want to paint.

While aspirations are often difficult to clarify and define, the reporting itself is very clear. It’s all about data and what can actually be put into a spreadsheet. It will be almost impossible to fake a commitment to values because of the amount of data points that you will need to use as evidence that you’re doing what you say you do, that your beliefs are being enacted.

In order to provide evidence, there has to be an ability to measure and report on it, or else it’s not going to deliver those benefits.

Organisations should carefully consider the data points that you need to collect to be able to demonstrate these values and ethics – it cannot be simply a tick-box exercise.

While there is a bit of cynicism or fatigue that arises when considering this – because as a as an industry, we already collect a huge amount of data for other purposes, whether that’s for regulatory compliance or for industry performance standards – there is still a need to connect and address the fact that ESG as it currently stands has not been developed for maritime.

Maritime has a lot of acronyms and names for things that might not resonate immediately with people that are compiling or evaluating companies and their reports.