Relevant Issues (6 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
- Customer Welfare
- Selling Practices & Product Labeling
- Labor Practices
- 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 The category addresses the company’s approach to managing risks and opportunities surrounding ethical conduct of business, including fraud, corruption, bribery and facilitation payments, fiduciary responsibilities, and other behavior that may have an ethical component. This includes sensitivity to business norms and standards as they shift over time, jurisdiction, and culture. It addresses the company’s ability to provide services that satisfy the highest professional and ethical standards of the industry, which means to avoid conflicts of interest, misrepresentation, bias, and negligence through training employees adequately and implementing policies and procedures to ensure employees provide services free from bias and error.
- 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
Marine transportation companies 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. The industry is among the most fuel efficient of the major transportation modes in terms of fuel use per ton shipped. However, due to the size of the industry, its contribution to the global GHG inventory is still significant. Recent environmental regulations are driving the adoption of more fuel-efficient engines 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.
Air pollutants such as sulfur oxides (SOx), nitrogen oxides (NOx), and particulate matter (PM10) are significant environmental externalities from the use of fuel by marine shipping companies. These pollutants tend to have localized environmental and health impacts and are especially a concern at port cities. Air pollution regulations are driving the adoption of more fuel-efficient engines and the use of cleaner-burning fuels as companies seek to reduce exposure to fines and environmental remediation costs. A further incentive for fuel efficiency is that fuel constitutes a major expense for industry players, so capital expenditures to upgrade vessels may be offset over the long term from fuel costs savings.
The operations and waste disposal practices of marine transportation companies can create substantial environmental externalities, such as water pollution and damage to marine life. Seagoing vessels routinely discharge ballast water, bilge water, and untreated sewage. Compliance with international regulations intended to manage the ecological impacts of operation can require significant capital expenditures to upgrade or install waste management systems. Illegal dumping of bilge water and other unregulated discharges can lead to hefty fines, negatively affecting a company’s risk profile. Operating in areas of protected conservation status, such as Emission Control Areas (ECAs) and Particularly Sensitive Sea Areas (PSSAs), can increase the risk of ecological impact as well as the risk of violating environmental regulations.
Employee Health & Safety
Employee Health & Safety
Marine transportation workers face dangers such as hazardous weather and exposure to large machinery and heavy cargo. The greatest health and safety risks stem from loading and unloading cargo at ports. Ships must be loaded and unloaded quickly and on schedule, increasing injury risk, fatigue, and stress. The health and well-being of workers in the industry is also inextricably linked to the safety performance of the company, as a healthy crew is necessary for safe voyages. Companies with inadequate safety management systems that fail to ensure the health and safety of workers may face higher turnover and higher worker-related expenses, including medical expenses such as insurance premiums and worker payouts.
Facilitation payments at ports are considered standard business practice in some countries to obtain permits, cargo clearance, and port berths. However, anti-bribery laws place pressure on marine transportation companies to alter this practice. Enforcement of these laws could lead to significant one-time costs, higher ongoing compliance costs, or affect a company’s social license to operate, affecting its cost of capital. Companies are under increasing pressure to ensure that their governance structures and practices can address corruption and participation—whether willful or unintentional—in illegal or unethical payments or exertion of unfair influence. Operating in corruption-prone countries can exacerbate these risks.
Critical Incident Risk Management
Accident & Safety Management
Accidents or leaks involving large vessels can have significant costs to life, property, and the environment. Negative media attention and massive cleanup costs can severely damage a company’s finances. In order to reduce the risk of accidents, companies put extensive safety measures into place, such as employee training programs, periodic dry-docking maintenance periods, and annual class-renewal surveys conducted by classification societies. The reliance of the global marketplace on the shipping industry means that voyages need to be made within precise timeframes, providing further incentive for preventing accidents.
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