Corporate social responsibility comes to maritime shipping
Growing realisation industry needs to move with times by formulating CSR policies and implementing self-regulation.
I had read with interest the article 'It is time to take action to make a major and permanent improvement in shipping's standing and image' from Det Norske Veritas.
It was important because it reflects the growing realization that corporate social responsibility and industry self regulation is an up-and-coming issue in maritime shipping.As DNV points out, shipping as an industry has been uniquely slow to adopt corporate social responsibility policies.
Multi-modal shippers such as DHL and FedEx, for example, have strong formal CSR programmes in place, as do most large companies in industries of comparable size to shipping-automotive,electronic,apparel,toys,petroleum.
In fact,the very companies that are the major beneficiaries of maritime shipping-Toyota, Shell, BP, Ford,Volvo, Cargill - have themselves become leading advocates of formal and forward-looking CSR programmes.
These major companies find it important to demonstrate to customers, activists and investors that they are aware of - and avoiding - unnecessary social and environmental risks by implementing a formal CSR policy and reporting on their efforts.
It can't be long before they realise that a major component of their supply chain - maritime shipping (an industry that accounts for more than 80% of world trade by volume) - has no formal policies, and is potentially a source of vulnerability for their corporate reputation.
So why, when most other major industries and organisations have moved rapidly to adopt CSR, have the leading companies in a multi-billion dollar industry such as maritime shipping not formalised their CSR policies?
It certainly isn't because the maritime shipping industry doesn't have social, environmental and corporate governance concerns. In fact, the same issues that apply to these land-based industries also apply (in spades) to maritime shipping.
On the social side, for example,shipping is driven by the same pressures for low labour costs that push any company toward globalisation of the supply chain and access to cheaper labour sources.
Ships are manned increasingly by crews from all over the world, with varying degrees of training on safety and incident management.
As the pressure to crew ships with low-cost labour has grown, a multitude of welfare issues - low pay, poor health care, "indentured servitude", blacklisting, agent fees, abandonment, prosecution - have become almost
commonplace.
These issues are no different (or at least are perceived as being no different
by interested stakeholders) from any other major industry-apparel, electronics,soft toys - where employees are exploited through low pay, long hours,and poor or unsafe working conditions.
And, of course, following 9/11 and the enactment of the International Ship and Port Facility Security code, port security issues affect not only the safety of the population but, through prosecution,port access and crew leave issues, affect the welfare of a ship's crew as well.
On the environmental side, of course,issues extend well beyond the high-profile disasters of the Prestige or the Tricolour.
It is not just oil spills or collisions that can threaten the good name of individual companies or the industry as a whole.
Ships are, after all, large pieces of metal travelling long distances carrying
potentially polluting materials; which means that the maritime cargo industry
has to deal with environmental issues as diverse as bilge water, ballast water,and anti-fouling paint. Sailing substandard ships, and even disposal and ship breaking policies, have both environmental and human rights implications. Then there are airborne emissions issues.
The reason for recent EU efforts in the Baltic and the North Atlantic regions to curb sulphur dioxide levels in bunker is that sulphur dioxide(causing acid rain) levels from marine sources alone have jumped from 10% of all acid rain in 1990 to an estimated 45% in 2010. It is predicted that, at the current rate, sulphur dioxide emissions by ships will overtake all land-based SO2 emissions by 2015; something that, once better appreciated, promises to severely tarnish the industry's name.
Ethics and corporate governance issues are exemplified in the lack of ownership transparency and flags of convenience issues.Substandard ships or poor adherence to IMO regulations by developing-world crews harm the reputation of quality shippers (and the industry as a whole),and will eventually contribute to higher running costs through greater insurance premiums, higher bank loan rates, and stiffer crew penalties and company fines.
Ironically, one reason that shipping has been able to avoid formal CSR programmes is that it appears to be, if anything,"over-regulated". After all, there are plenty of rules governing social, safety and environmental practices.
But although the IMO sets the regulations, the responsibility for enforcement
still remains primarily with port state authorities. And that enforcement
varies widely.
The fact is, maritime shipping is a truly global industry and, despite the best efforts of regulatory groups, it stillremains subject to much less scrutiny
than similar land-based industries.But that means that shipping is more-not less - dependent than most industry groups on self-regulation and voluntary compliance.
In fact, as other industries have found,mere compliance is seldom the answer anyway. When activists accused Nike of accepting sweatshop labour in their overseas contract factories, for example,it was not enforcement of regulations by the Chinese or Cambodian governments that forced the company to adopt a strict code of conduct or formal supplier monitoring policies. It was market forces - reputation damage,loss of brand value, a drop in share price, upset employees, boycotts by customers-that forced Nike and the apparel industry in general to adopt a formal CSR programme.
And it is only Nike's insistence (not regulatory compliance) that forces their suppliers in developing nations to adhere to higher standards of behaviour.
In short, the same pressures that apply to other major industries can also
directly apply to shipping. NGOs like Greenpeace and WWF, for example, can expose ships owners and ships managers for poor environmental practices just as quickly as Corpwatch or Oxfam can highlight sweatshop policies or pollution in factories or farms. Shipowners - no different from brand owners in any industry-need to protect their brand image by making certain that they can prove to activists, investors,charterers and insurers, that their ships are safe and environmentally sound.
Even if ship owners do not face these types of publicity and consumer pressure issues directly themselves, many of their customers will, and will seek to manage risk in this area by selecting shippers with verifiable CSR policies.
Similarly, shipmanagement companies need to be able to prove to the owners (their customers) that they can provide reliable, well-trained crew, and have good environmental, health and safety policies built into their day-to-day operations.
That means being able to assure owners that they will not be embarrassed by
seeing their ships on the evening news being hauled into an EU port for illegal
liquid discharge (especially if the incident was a result of the actions of an indifferent or poorly-trained crew).
For all of these reasons, and for the good of the industry and the good name of quality shippers, the time has come for leaders in the shipping industry to lobby for uniform - and self-enforced - standards in environmental,health, safety and corporate governance.A single,transparent publication of compliance against IMO andInternational Safety Management codes would be a good start.
In short, it is time that the maritime shipping industry began to adopt a formal
and standardised approach to CSR. The good news is that this is already
starting to happen. NYK, for example,have a laudable policy on social responsibility that includes a formal and published approach to issues such as
corporate governance, IMO compliance,safety, social and environmental
activities.
Wallenius Wilhelmsen were the first to convert their ships to low-sulphur
dioxide fuels and achieve a 1.5% average sulphur level. Associated British Ports has a strong CSR framework that invites input from important stakeholder groups and publishes a CSR report that addresses the gamut of CSR-related issues.
These companies should be congratulated for their efforts; and others should
begin to follow their lead.For all of these reasons, we at ProActive,the research and advisory group, in co-operation with maritime industry leaders, are organising a CSR in Maritime Shipping conference, to take place March 14-15th in London. It will not be just another networking or presentation- based conference.
We hope instead to create a forum that will, through working groups over
the next two years, allow industry leaders(owners, ships management, port authorities, class, etc) to create CSR standards for their respective industries
that will ensure good behaviour and improve industry performance.
It is an important initiative and, like DNT, we hope that it ushers in a new era for corporate social responsibility in maritime shipping.
Dale Neef
www.dnamaritime.com
