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  • Human Rights & Community Relations
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General Issue Category
(Industry agnostic)

Disclosure Topics (Industry specific) for:
Marine Transportation

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GHG Emissions

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 Quality

Air Quality

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.

Ecological Impacts

Ecological Impacts

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.

Business Ethics

Business Ethics

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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