Page 19 - 2022 - Q2 - Minerva in Focus

How is safety a part of ESG?

In recent years terms like sustainability mandatory in order to ensure the worldwide used by shipowners or could relatively easily
and ESG (Environmental, Social and Gov- protection of seafarers’ rights, including the be monitored by implementing appropriate
ernance) have become very common in the right to a safe and secure workplace that measures.
shipping industry. However, what do these complies with safety standards. Therefore, However, being socially responsible and
words mean in practical terms and where governance in the form of a legal framework ensuring that seafarers are able to work in a
does the continuous focus on safety, which providing for a safe working environment safe and secure workplace goes well beyond
has been prioritised for many years, fit into within the maritime industry has existed for measuring safety performance alone. Achiev-
all this? In particular, how does it align with some time. ing a high safety performance and credible
a shipowner’s current safety work? So, what does aligning already certified ISM ESG reporting means having a solid safety
management systems with the requirements foundation in place, which obviously includes
Firstly, it is crucial to understand the difference of the ESG reporting principles mean for complying with the statutory requirements
between sustainability and ESG. In its broadest shipowners? Well, the short answer is, if it is of the ISM, MLC and other applicable instru-
sense, sustainability is a somewhat fluid um- a well-established ISM system, then perhaps ments. However, building a company safety
brella term for “doing good”, which can then be not so much, and this is mainly down to sec- culture and developing safety initiatives and
translated into various ethical and responsible tion 12.3 of the ISM Code, which states that: tools beyond the statutory minimum require-
business practices. ESG, on the other hand, sets ments should also be in progress. While many
specific criteria to define environmental, social, “The Company should periodically evaluate established shipowners are likely to have
and governance systems as sustainable and the effectiveness of the SMS in accordance with achieved this, newcomers may still be trying
protect the shipowner from operational and procedures established by the Company.” to find their way. Also, remember that contin-
reputational risks. This is where providing a uous improvement is still the key objective
safe working environment becomes an essen- Evaluating the effectiveness of a Safety Man- of both the internal safety KPIs and ESG re-
tial part of a shipowner’s social responsibility agement System (SMS) can be done using porting, as it is all about setting performance
towards their employees. various methods. One such method is the targets and improving the company’s figures
internal audit, another requirement of the ISM over time. Over the years, Britannia P&I’s Loss
Of course, creating a safe working environ- code. However, to benchmark performance Prevention department has assisted shipown-
ment is nothing new within the shipping in- more easily and establish whether it is moving ers in improving their safety performance and
dustry. The International Safety Management in a positive or negative direction, Safety Key establishing a healthy safety culture - most
(ISM) code became mandatory in the nineties Performance Indicators (KPI) were introduced. recently, through the award-winning BSafe
to provide an international standard for ships’ These are essentially an expression of an campaign targeted at seafarers, aimed to help
safe management and operation and prevent organisation’s ability to effectively manage its influence behaviours and prevent onboard in-
pollution. The ISM code is built on the principle personnel’s health and safety. Therefore, ship- juries and losses. The BSafe initiative includes
of assessing all identified risks to a shipown- owners will be very familiar with terms like Lost case studies of previous incidents as analys-
er’s ships, personnel, and the environment Time Injury Rate (LTIR) and marine casualties. ing them and identifying lessons learned that
and then establishing appropriate safeguards can be shared with others is an integral part of
to mitigate these risks, allowing shipowners This way of reporting safety performance is improving safety performance.
to learn from any mistakes and achieve con- also an important part of ESG reporting. The
tinuous improvement by analysing incidents Sustainability Accounting Standards Board While some may still think that sustainability
and implementing preventive actions. Late in (SASB) has produced standards identifying the and ESG are merely buzzwords, the fact is they
2013, the International Labour Organisation’s ESG issues most relevant to financial perfor- are unlikely to go away; on the contrary, they
Maritime Labour Convention (MLC) became mance in 77 industries, including marine trans- are bound to become increasingly important.
portation. The SASB Marine Transportation The Poseidon Principles, first introduced with-
Sustainability Accounting Standard stipulates in the finance sector to provide a framework
a number of ESG reporting categories relevant for integrating climate considerations into
to shipping. These include Greenhouse Gas lending decisions to promote international
Emissions, Ecological Impact and Business shipping decarbonisation, have also spread
Ethics, and Employee Health and Safety Man- to the marine insurance sector. However, the
agement. The LTIR and the number of marine sustainability and ESG agendas are not only
casualties and very serious marine casualties driven forward by financiers and insurers but
are both listed as reporting requirements. also by customers asking how shipowners
Some of the other non-safety-related report- are fulfilling their environmental, social, and
ing requirements of the SASB Marine Trans- governance obligations. Considering all the
portation standard include the number of above, one can safely say that safety is very
PSC detentions, emissions, and the number of much part of the ESG agenda, although it is not
calls at ports in countries ranking among the what the ‘S’ in ESG stands for. Nevertheless,
by Jacob Damgaard 20 lowest on the Transparency International’s the safety aspects of ESG may not be too far
Associate Director- Loss Prevention, Corruption Perception Index. Again, most of from what a prudent shipowner has already
Britannia P&I Club these reporting criteria are already being implemented and is continuously optimising.

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