Relevant Issues (7 of 26)
- GHG Emissions The category addresses direct (Scope 1) greenhouse gas (GHG) emissions that a company generates through its operations. This includes GHG emissions from stationary (e.g., factories, power plants) and mobile sources (e.g., trucks, delivery vehicles, planes), whether a result of combustion of fuel or non-combusted direct releases during activities such as natural resource extraction, power generation, land use, or biogenic processes. The category further includes management of regulatory risks, environmental compliance, and reputational risks and opportunities, as they related to direct GHG emissions. The seven GHGs covered under the Kyoto Protocol are included within the category—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen trifluoride (NF3).
- Air Quality The category addresses management of air quality impacts resulting from stationary (e.g., factories, power plants) and mobile sources (e.g., trucks, delivery vehicles, planes) as well as industrial emissions. Relevant airborne pollutants include, but are not limited to, oxides of nitrogen (NOx), oxides of sulfur (SOx), volatile organic compounds (VOCs), heavy metals, particulate matter, and chlorofluorocarbons. The category does not include GHG emissions, which are addressed in a separate category.
- Energy Management
- Water & Wastewater Management
- Waste & Hazardous Materials Management
- Ecological Impacts The category addresses management of the company’s impacts on ecosystems and biodiversity through activities including, but not limited to, land use for exploration, natural resource extraction, and cultivation, as well as project development, construction, and siting. The impacts include, but are not limited to, biodiversity loss, habitat destruction, and deforestation at all stages – planning, land acquisition, permitting, development, operations, and site remediation. The category does not cover impacts of climate change on ecosystems and biodiversity.
- Human Rights & Community Relations
- Customer Privacy
- Data Security
- Access & Affordability
- Product Quality & Safety The category addresses issues involving unintended characteristics of products sold or services provided that may create health or safety risks to end-users. It addresses a company’s ability to offer manufactured products and/or services that meet customer expectations with respect to their health and safety characteristics. It includes, but is not limited to, issues involving liability, management of recalls and market withdrawals, product testing, and chemicals/content/ingredient management in products.
- Customer Welfare
- Selling Practices & Product Labeling
- Labor Practices The category addresses the company’s ability to uphold commonly accepted labor standards in the workplace, including compliance with labor laws and internationally accepted norms and standards. This includes, but is not limited to, ensuring basic human rights related to child labor, forced or bonded labor, exploitative labor, fair wages and overtime pay, and other basic workers' rights. It also includes minimum wage policies and provision of benefits, which may influence how a workforce is attracted, retained, and motivated. The category further addresses a company’s relationship with organized labor and freedom of association.
- Employee Health & Safety The category addresses a company’s ability to create and maintain a safe and healthy workplace environment that is free of injuries, fatalities, and illness (both chronic and acute). It is traditionally accomplished through implementing safety management plans, developing training requirements for employees and contractors, and conducting regular audits of their own practices as well as those of their subcontractors. The category further captures how companies ensure physical and mental health of workforce through technology, training, corporate culture, regulatory compliance, monitoring and testing, and personal protective equipment.
- Employee Engagement, Diversity & Inclusion
Business Model & Innovation
- Product Design & Lifecycle Management
- Business Model Resilience
- Supply Chain Management
- Materials Sourcing & Efficiency
- Physical Impacts of Climate Change
Leadership & Governance
- Business Ethics
- Competitive Behavior
- Management of the Legal & Regulatory Environment
- Critical Incident Risk Management The category addresses the company’s use of management systems and scenario planning to identify, understand, and prevent or minimize the occurrence of low-probability, high-impact accidents and emergencies with significant potential environmental and social externalities. It relates to the culture of safety at a company, its relevant safety management systems and technological controls, the potential human, environmental, and social implications of such events occurring, and the long-term effects to an organization, its workers, and society should these events occur.
- Systemic Risk Management
Disclosure Topics (Industry specific) for:
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Greenhouse Gas Emissions
Cruise lines generate emissions mainly from the combustion of diesel in ship engines. The industry’s reliance on heavy fuel oil (“bunker fuel”) is of material concern due to rising fuel costs and intensifying greenhouse gas (GHG) regulations. Evolving environmental regulations are driving the adoption of more fuel-efficient engines, engine retrofits, and the use of cleaner-burning fuels. Fuel constitutes a major expense for industry players, providing a further incentive for investing in upgrades or retrofits to boost fuel efficiency. In addition, violation of GHG regulations can lead to fines and compliance costs.
Fuel use by cruise lines generates air pollutants such as sulfur oxides (SOx), nitrogen oxides (NOx), and particulate matter (PM10). These pollutants tend to have localized environmental and health impacts and are especially a concern at port cities and other restricted areas where companies may be penalized for exceeding emissions limits. Companies are managing these risks by commissioning more energy-efficient vessels, retrofitting existing fleets, and using onshore power when it is available at ports.
Discharge Management & Ecological Impacts
Cruise vacations offer unique access to pristine ocean waters and destinations with delicate ecosystems. These sensitive ecosystems can be threatened by the size of the ships, the influx of tourists, and the scale of the resources consumed and waste generated on board. Cruise ships discharge many types of treated and untreated wastewater at sea and non-degradable solid wastes on land. Careful management of ship discharge and mitigation of the ecological impacts of cruise line operations will ensure continued access to key ports and will help preserve the natural beauty that guests wish to experience, both of which are key for companies to maintain market share as well as attract new customers.
Product Quality & Safety
Customer Health & Safety
Cruise lines offer a variety of luxury experiences and activities to their customers, including elaborate shows, casinos, fine dining, indoor skydiving, spa treatments, swimming, and fitness facilities. Each activity comes with its own set of health risks and safety challenges and liabilities that cruise companies must navigate. Consumer expectations for safety and comfort are high, so issues such as health risks and physical safety risks are especially important to avoid. Highly publicized cases of crimes, injuries, and illnesses onboard cruise ships can have serious impacts on brand value and ticket sales. There may also be high costs associated with customer lawsuits. While crime rates are low when compared to crime statistics in most developed countries, law enforcement is much trickier, and cases are not as easy to resolve as it is common for ships to take passengers to international waters and to fly a foreign flag, creating uncertainty about which jurisdictions are responsible for law enforcement needs. Companies can protect customer health and safety through implementation of a robust safety management system.
Cruise lines employ thousands of workers onboard each large vessel. Most ships are registered in countries where labor laws allow flexibility in many dimensions including pay, hours, fair treatment, and termination. Ship crews are multinational, and many are hired on a contract basis. Workers often put in long hours for months at a stretch and stay in shared quarters, which can make it difficult to recuperate. Some companies offer a gratuity-based wage structure to reduce payroll costs. Language barriers and the complexity of flag-state laws and the laws in workers’ home countries can make it difficult for workers to file charges in the case of labor law violations. Low morale among workers can impact their ability to meet customer service expectations, reducing a company’s revenues and market share.
Employee Health & Safety
Employee Health & Safety
Cruise companies operate a uniquely transitory service that requires them to provide all the safety oversight of a small city, including addressing all medical and security needs. A commitment to providing a clean and sanitary environment on board is important for protecting crew health, which can affect customer health and thus a company’s reputation and market share. Additionally, there can be several governing bodies—including the flag state, port state, and home country of a crew member—involved in both providing and enforcing safety regulations for the industry. These regulations can create confusion regarding the protections afforded to crew members. Companies that fail to protect crew health and safety may also face higher turnover and difficulties in employee recruitment and retention.
Critical Incident Risk Management
Although cruising is statistically one of the safest forms of travel for vacationing, the industry competes largely on customer experience and satisfaction, making safety management a top priority. Given the scale of cruise vessels and the vulnerability of passengers at sea, it may only take one mismanaged accident to shake consumer confidence in a company. While major accidents are rare, they have the potential to affect not only a company’s revenue and reputation, but those of the Cruise Lines industry as a whole. Proper equipment maintenance, staff training, and use of the latest safety technologies and practices across the entire fleet can protect a company’s safety record and ensure high customer satisfaction while lowering a company’s risk profile and cost of capital.
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