Sustainability for

Shipping Companies

Presenter: Brijesh Tewari

Date: August 2023
UN Sustainable Development Goals

Lloyd's Register 2
IMO Sustainability

IMO’s 2013 definition, updated by UNCTAD 2019

“sustainability in maritime transport entails, among other features, the ability to provide
transportation infrastructure and services that are:

Safe Fuel-efficient
Socially inclusive Environmentally friendly
Accessible Low-carbon
Reliable Resilient to shocks and disruptions
Affordable

Lloyd's Register 3
IMO & Sustainable Development

CONSERVE AND SUSTAINABLY USE THE OCEANS, SEAS

AND MARINE RESOURCES FOR SUSTAINABLE
DEVELOPMENT
ENSURE ACCESS TO AFFORDABLE, RELIABLE,
SUSTAINABLE AND MODERN ENERGY FOR ALL

TAKE URGENT ACTION TO

COMBAT CLIMATE CHANGE
AND ITS IMPACTS
ENSURE SUSTANIABLE
CONSUMPTION AND
PRODUCTION PATTERNS

Lloyd's Register 4
Sustainability

Adapted from Sornn-Friese et al., 2021

Lloyd's Register 5
The three horizons approach

The long-term
successor to
business as usual
Structure of a system

To 2030 The 2030s To 2050

Critical window Time
Scaling up Consolidation
for change
Adapted from The Approach (iffpraxis.com) 6
2023 IMO GHG Strategy
MEPC.377(80) 2023 IMO Strategy for the reduction of Green House Gases from Ships

Ambitions
Carbon Intensity Zero or near-zero
Reductions via improved emission fuels or energy Net zero GHG emissions from
energy efficiency sources shipping

New ships: strengthen EEDI 5% (striving for 10%) uptake By or around 2050, accounting
Existing ships: 40% average by 2030 for national circumstances
CII  by 2030

Net zero GHG emissions indicative checkpoints (compared to 2008)

20%  (striving for 30%) by 2030
70%  (striving for 80%) by 2040
Short term Mid term Long term

Basket of measures
Measures in place Pending review of the 2023
EEDI, EEXI, CII, SEEMP 1. A technical element GHG strategy
2. An economic element

For review by 1 Jan 2026 For adoption in 2025 and EIF 2027 Due Autumn 2028
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Shipping facing a tiered future?

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Sustainability requires responsible business practices to ensure long-term survival

WHAT IS SUSTAINABILITY?
▪ Sustainability is a broader principle of responsible and
ethical business practices

▪ Sustainable businesses look at a Triple Bottom Line

focusing on the impacts on people, the planet and
profits in totality.
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ESG is a framework to evaluate a company's environmental, social, and governance
performance

SUSTAINABILITY AND ESG IMPORTANCE OF ESG

▪ Sustainability is an umbrella term that encompasses all of a company’s efforts to reduce its
impact on the world around it.
To encourage companies to
▪ This becomes a very broad concept to integrate across company operations and makes it prioritize social and environmental impact
difficult to identify, measure and report. alongside financial performance
▪ The concept of ESG provides a framework to collect data and report performance.
▪ ESG issues were first mentioned in the 2006 United Nation’s Principles for Responsible ESG enables stakeholders and investors to
Investment (PRI) report consisting of the “Who Cares Wins.” ESG criteria were, for the first time, direct capital towards sustainable investments
required to be incorporated in the financial evaluations of companies. aligned with their values, while holding
institutions accountable for their operations
WHAT IS ESG?
▪ ESG refers to Environmental, Social and Governance factors considered by companies when Strong performance across ESG factors
managing their operations, and investors when making investments, in respect of the risks, enhances business resilience, stability, and
impacts and opportunities. drives positive change aligned with frameworks
such as the UN Sustainable Development Goals
▪ Climate change ▪Human Rights
▪ Biodiversity loss ▪Health & Safety ESG reporting enables investors to
▪ Emissions to air, water, land ▪Diversity measure companies’ commitment to
Environment Social
▪ Water / Resource use ▪Community Wellbeing relevant environmental, social and governance
issues in their supply chains
Governance

Improved corporate social responsibility

through ESG considerations can attract more
▪ Corruption and business ethics investors
▪ Board governance
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LR enables global technology innovation through R&D, collaborations and driving
uptake by piloting new concepts to deliver sustainable outcomes.

LR’S FOUNDATIONS FOR SUSTAINABILITY

LR enables the successful development and adoption of diverse use of low-carbon
energy sources to support a transition to a low-carbon future. We do this by:
▪ Improving energy efficiency and providing operational performance improvements.
▪ Innovating and testing a diverse mix of energy sources (renewables, hydrogen and
nuclear)
▪ Understanding the complexities of decarbonisation
LR enables resource and operational efficiency and transparency throughout the
supply chain, to drive best-in-class life cycle costs and environmental
performance striving towards a sustainable circular economy. We do this by:
▪ Implementing the digitalisation of supply chains to drive performance and
continuous improvement.
▪ Providing a verifiable record of GHG management and emissions reductions.
▪ Targeting areas where performance can be improved.
▪ Working towards enabling a transition to a circular economy.
LR works with relevant stakeholders to balance the rights and responsibilities for
sustainable use and access, improve ocean governance and enable sustainable
growth of ocean industries. We do this by:
▪ Providing solutions to reduce marine environmental impacts and biodiversity
impacts.
▪ Collaborating with stakeholders on wider sustainable ocean use and ocean
governance to develop solutions.

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 Partnering with clients to tackle business challenges

OUR SERVICE OFFERINGS ARE ALIGNED WITH A BROAD BASE OF INDUSTRY CHALLENGES AND ARE ADAPTABLE TO CLIENT NEEDS
STRATEGIC ADVISORY SHIP VALUE CHAIN
Prepare your business for future challenges
DESIGN FINANCE BUILD INSURE OPERATE SHIP

TECHNICAL & COMMERCIAL DUE DILIGENCE Owners Owners Owners Owners

Assess and position your project,
Shipyards VOYAGE
investment or acquisition Banks Yards
Asset
Charterer
Insurers
Designers

OEMs Junior OEMs Managers

SUSTAINABILITY & ESG ADVISORY
Create a clear and actionable
BUSINESS Sustainability strategy ESG SERVICE OFFERINGS
ADVISORY

PERFORMANCE OPTIMISATION
Improve costa, optimise operations,
ensure safety and compliance ESG Strategy Sustainable Sustainable Climate Risk
ESG Assurance
and Reporting Supply Chain Finance and Adaptation

PROJECT MANAGEMENT
Optimise the value of your project investments
LR has been supporting organisations in maintaining the highest order of ESG
reporting and build effective environmental strategies
ESG REPORTING
LR has assisted many organisations in maintaining the highest standards of
corporate responsibility by recognising that the internal and external drivers of
sustainability are likely to necessitate significant and profound changes across
the business. LR Sustainability team has years of experience providing
clients with ESG services and assists clients with:
▪ Materiality assessment and stakeholder dialogue
▪ ESG Reporting design
▪ ESG risk management and model preparation
▪ Due Diligence, Audits
▪ ESG Report preparation
LR has undertaken many studies to prepare Environmental Management Plan
(EMP) which proposes the company’s environmental protection policy, procedures,
measures to increase environmental performance and commitments to reduce the
environmental impacts. EMP is prepared as a ‘standalone’ document, to be used as the
basis for actively managing the fleet’s environmental activities and progress
considering Marpol Annex (I-VI). The EMPs outline the overarching performance
criteria, control strategies, monitoring, auditing and corrective actions unified to
comply with ISO 14001 or international reporting standards (TCFD, GRI etc.)
LR has conducted Materiality Assessments for various organizations to identify
Material Environmental Topics to focus on in the EMP
The objectives of the EMP are to provide:
▪ Identify Material Environmental Topics to focus on in the EMP
▪ A ‘standalone’ manual for accounting fleet’s environmental activities;
▪ Evidence of practical and achievable plans listed with environmental requirements
is compliant;
▪ An integrated plan for monitoring, assessing and controlling potential impacts;
▪ An enhanced plan for identifying KPIs whilst target setting, benchmarking and
analysing for improvements;
▪ Prepare a strategizing approach for advancements to comply with future
regulations.
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LR can support converting sustainability challenges to measurable competitive
advantage for clients

OUR OFFERINGS

ESG Strategy and Sustainable Sustainable Climate Risk and

Reporting ESG Assurance Supply Chain Finance Adaptation
▪ Materiality Assessment ▪ Third Party Assurance – ▪ IS0 20400 assessments ▪ ESG finance assurance – ▪ Climate risk assessment
▪ Lifecycle Assessment ESG, GHG Emissions, ▪ Strategy and green, social & and reporting
Carbon footprint, LCA, governance structures sustainability bonds &
▪ Carbon footprints ▪ Waste management and
Materiality Assessment, green loans
▪ Supplier evaluation, circular economy
▪ Carbon intensity and Sustainability
audits & assessment ▪ Climate Bond
rating system - EEXI, Framework ▪ Climate change
Certification Support
EEDI, CII ▪ Supply Chain Risk adaptation plans
▪ Impact Assessment
Management ▪ ESG capital allocation
▪ Strategy Development, ▪ Ship recycling
▪ Writing & design of services
Implementation corporate ▪ Sustainable ▪ GHG emission
Support and review Procurement ▪ ESG valuations and Due
communications management
Diligence
▪ ESG Risk Assessment ▪ Data sourcing &
▪ Emissions Trading
▪ Energy Transition measurement
Certificate Support
▪ ESG Reporting ▪ Certification support

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LR can support in various stages of your ESG journey

PREPARING A CREDIBLE ESG STRATEGY

1. Start with a credible foundation:
Start with a robust baseline with credible datapoints in line with present and future requirements that can support
business decisions as well as regulatory requirements
ESG Baseline Preparation, Stakeholder Analysis, Materiality Assessment, ESG Risk Assessment, Carbon footprints, Lifecycle
Assessment

ESG Strategy and

Reporting 2. Set time-bound long-term ESG commitments with interim targets:
Develop specific and well-defined ESG commitments in line with the company vision, mission and industry requirement
▪ Materiality Assessment Strategy Development, ESG Targets
▪ Lifecycle Assessment
▪ Carbon footprints
▪ Carbon intensity and 3. Define a clear roadmap for how to achieve targets:
rating system - EEXI, Identify detailed and tangible initiatives and prioritize them to define a clear and actionable roadmap
EEDI, CII Strategy Implementation, ESG Roadmaps, Sustainability Initiatives
▪ Strategy Development,
Implementation Support
and review
4. Track progress of the ESG commitments:
▪ ESG Risk Assessment Track and report progress in line with globally recognized reporting standards to showcase performance and improve
▪ Energy Transition future commitments.
Benchmarking with peers, ESG reporting, Carbon Footprints, Carbon intensity and rating system - EEXI, EEDI, CII
▪ ESG Reporting

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LR can support in building trust around the robustness of your non-financial
disclosures

ESG ASSURANCE OFFERINGS

1. Data Sourcing and Measurement for non-financial disclosures:
LR can support with sourcing data and measurements as well as with setting processes and procedures for effective data
collection for non-financial disclosures
Data Sourcing and Measurement, ESG Data Management Practices

ESG Assurance 2. Third party Assurance for non-financial disclosures, carbon models, avoided emissions
estimations etc.:
LR’s in house expertise in both maritime and sustainability can provide assurance statements for various non-financial
disclosures and carbon statements. LR can provide pre-assurance assessments and support you throughout your certification
▪ Third Party Assurance –
journey.
ESG, GHG Emissions,
Third Party Assurance, Certification support, Avoided emissions assurance
Carbon footprint, LCA

▪ Impact Assessment 3. Communications and Reporting:

▪ Writing & design of LR can support with External or Internal Communications and Reporting to ensure effective reporting to various stakeholders.
corporate External reporting, Writing and design of corporate communications
communications

▪ Data sourcing & 4. Strategic Impact Assessment:

measurement Impact Assessment offers a high-level view of your organisation’s effect on the environment, economy and wider society – and
then prioritises actions to improve your position by maximising returns for your most important stakeholders by measuring,
▪ Certification support monetizing and aggregating the impacts.
Impact Assessment

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LR can support in transforming supply chains to continue creating competitive
advantage while supporting a sustainable future

BUILDING A SUSTAINABLE SUPPLY CHAIN

1. Setting up robust strategy and governance structures:

LR can support with preparing a robust Sustainable Supply Chain Strategy and a well-defined governance structure in line with
global standards and industry best practice
Strategy and Governance Structure, Sustainable Procurement Strategy
Sustainable Supply
Chain
2. Risk Management:
Identify ESG risks associated with the specific supply chain and provide actionable inputs to reduce or diversify the risk.
▪ IS0 20400 assessments
Supply Chain Risk Management
▪ Strategy and governance
structures
3. Sustainable Procurement:
▪ Supplier evaluation, LR can support with setting up procedures and processes to evaluate and assess suppliers and conduct regular assessments in
line with the company ESG targets.
audits & assessment
Sustainable Procurement, Supplier evaluation, audits and assessment
▪ Supply Chain Risk
Management

▪ Sustainable
Procurement

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LR can support in the transition to a low carbon economy while mitigating
financial risk and creating value

SUSTAINABLE FINANCE

1. Sustainable strategy integration and business enablement:

LR can support the preparation of the strategy to access sustainable finance through different financial
instruments
Sustainable Sustainable Finance Strategy, Responsible investing – policies and frameworks
Finance
2. Ensure compliance with regulatory changes:
LR can support the major transformation in Finance and Risk reporting processes, calculation engines,
▪ ESG finance assurance – systems data, and fill data gaps to properly manage risks and disclosures.
green, social &
ESG Finance Assurance– green, social & sustainability bonds & green loans, Climate Bond Certification, ESG
sustainability bonds &
green loans Valuations and Due Diligence, ESG Capital Allocation Services

▪ Climate Bond
Certification Support

▪ ESG capital allocation

services

▪ ESG valuations and Due

Diligence

▪ Emissions Trading
Certificate Support

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LR can support in development of a dynamic adaptation strategy, to shield
your organization from climate risk cost exposure

PREPAREDNESS TO CLIMATE RISK

1. Assessing risk and planning adaptation measures:
LR can support companies to assess their exposure to climate risks, support their climate adaptation and
resilience strategies and develop their solution response
Climate risk assessment and reporting, Climate change adaptation plans
Climate Risk and
Adaptation
2. Strategy development:
LR can support developing strategies for reducing climate risk and supporting sustainable
▪ Climate risk assessment
improvements.
and reporting Climate change adaptation plans, GHG emission management, Waste management and Circular economy
▪ Waste management and
circular economy 3. Projects to support sustainable shipping:
LR enables global technology innovation through R&D, collaborations and driving uptake by piloting new
▪ Climate change adaptation
concepts to deliver sustainable outcomes
plans Ship recycling
▪ Ship recycling

▪ GHG emission management

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Case Studies
SATORP GHG ASSURANCE
Lloyd’s Register conducted an independent limited assurance verification of
GHG data for the year 2022 for Saudi Aramco Total Refining and
Petrochemical Company.
The GHG figures were verified for a materiality threshold of 5%. The verification
assessment was carried out as an evidence-based "interview / workshop style"
review of emissions management procedures, calculations and supporting
evidence provided by the SATORP team.
The numbers and basis for calculations and methodology were verified against
international standards such as ISO 14064-3.2019 Specification with
guidance for the validation and verification of greenhouse gas statements,
Compendium of Greenhouse Gas Emission methodologies for the Oil and
Natural Gas Industry. The procedure for measuring GHG emissions was also
verified.
SATORP was provided with certain corrective actions needed for the calculation
ASYAD SHIPPING ESG REPORT PREPARATION
Lloyd’s Register worked on the preparation of the ESG report for Asyad in line
with the GRI Reporting Standards and the SASB Marine Transportation
Standard.
We conducted a detailed materiality survey with internal and external
stakeholders to find relevant topics within Environment, Social and
Governance sectors. We conducted detailed workshops with various
departments of the organization to collect relevant data for the ESG report and
analyzed it. The Scope 1, Scope 2, Scope 3 emissions figures were verified
and reported in the form of an ESG report alongside other numbers such as
water consumption, waste generation and other social and governance
parameters. The numbers and basis for calculations and methodology was
verified against international standards such as ISO 14064-3, GRI Reporting
Standards etc. The procedure for measuring GHG emissions was also verified.
Asyad was provided with certain corrective actions needed for the calculation.
Employee data, Employee well-being and internal policies and CSR
programs were assessed for the Social and Governance section of the
report. The identified topics were also mapped to relevant SDG goals.
An ESG Strategy for the next 10 years, data collection and reporting framework
and KPIs for analysis were also established. We supported them in forming a
formal ESG committee within the organization and helped outline their duties
and responsibilities.
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Case Studies
NSML ORGANIZATION ASSESSMENT
The client, a ship management and maritime services company with LNG and
LPG fleet, approached LR to conduct an organizational assessment and make
recommendations to ensure a fit-for-purpose organization which is aligned with
their future goals.
As part of the project, LR assessed the current state, identified gaps with best
practices, and provided recommendations with action plans in order to enable
the client’s objective to become an International Shipmanagement and
Maritime Services company. Our work was focused on an assessment of the
organization against an Organisation Assessment Framework, looking at the
strategic context, and overall Delivery Approach before undertaking a deep dive
into its Organisation Model. LR also conducted a detailed ‘Culture Survey’ to
assess employee well-being and organisational culture. Detailed
recommendations to improve the organization’s culture were made.
As part of this, a detailed assessment was undertaken of the shape of the
organization, its structure, the organization’s enablers, its human resource
capacity and capability, and the culture of the organization. Building upon this
assessment LR undertook a comprehensive analysis of barriers and challenges
to the client’s strategic objectives and prepared a targeted action plan for
addressing identified gaps in each of these.
PRECIOUS SHIPPING ESG FOR REFINANCING
Precious Shipping Limited (PSL) is an owner and operator of dry bulk vessels,
active in the tramp freight market for more than 30 years. Headquartered in
Thailand, PSL owns and operate more than 30 vessels in the Handysize,
Supramax and Ultramax market segments.
As part of a refinancing of 5 operating ships, IFC agreed to provide a debt
package to the wholly owned subsidiary of PSL. As a pre-requisite of this loan,
IFC required that an Environmental and Social Due Diligence (ESDD) be
undertaken. This must include a systematic appraisal of risks and
identification of mitigation options as part of an Environmental & Social
Action Plan (ESAP)
The ESDD process included a detailed review of the Corporate and vessel E&S
documentation provided by PSL, interviews with PSL staff, inspections of two
of the vessels by LR auditors, interviews with the crew and a visit to the dock, an
assessment of navigation routes and sensitive marine biodiversity areas and
consultations with biodiversity stakeholders. Other project deliverables were:
▪ Initial Red Flag Report
▪ Comprehensive comparison of compliance requirements with a level of
alignment at the Corporate and Project level
▪ Identification of required actions to address identified gaps (ESAP)
▪ High-level Capex / Opex estimation for identified actions.
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Case Studies
MUBADALA
As part of a wider examination of how ESG considerations impact upon
its investment risk profile, Mubadala, a sovereign wealth entity with
an investment portfolio exceeding $100billion in asset value, recognized
that there was a need to improve its internal approach to Sustainability.
LR was commissioned by Mubadala to develop a set of Guiding Principles
for Sustainability in the organization, and to develop a detailed 3-year plan
to both consolidate existing actions and to roll out further initiatives. This
plan needed to balance top management ambition to be identified as a leader
in the area, with the challenges of a complex asset portfolio invested
across a number of high-visibility sectors.
LR worked with the organization, engaging with top management, to develop a
comprehensive understanding of the ambition and remit of
the Sustainability program, articulating this into a common statement
of principles that would underpin future work in this area. This was then
used a basis for development of a 3-year Action Plan setting out plans for
additional initiatives and consolidating existing actions within a
comprehensive monitoring framework to ensure outcomes are measured and
performance incentivized.
ATTICA ENVIRONMENTAL STRATEGY
Attica is Greece’s largest ferry operator with 32 vessels operating across
4 countries. Attica recognised that the internal and external drivers
of sustainability, namely the EU and IMO regulations, are likely to
necessitate significant and profound changes across the business in the coming
years. Thus, Attica sought an advisor with a deep understanding of
marine engineering to help develop an environmental strategy with focus
on emissions reduction.
LR developed a detailed overview of internal (operations, fleet,
reporting) and external (regulations, competition, market) factors to create
a baseline for the strategic analysis. We then conducted a materiality
assessment, through techno-economic modelling, of the identified
potential solutions and prepared a decarbonisation roadmap which
incorporated a clear phased timeline, actions, key constraints and KPIs.
Attica was able to develop a better understanding of their current situation and
impact of the upcoming regulations on their financial performance and had an
actionable roadmap to help with strategic decision making
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Established more than
Trusted maritime advisers
260 years Partnering with clients to drive performance
ago as the world’s first
marine classification across the ocean economy
society to improve the
safety of ships.

CLASSIFICATION, ADVISORY & INNOVATION &

COMPLIANCE & PERFORMANCE DIGITAL
ASSURANCE SERVICES SOLUTIONS

The Lloyd’s Register Foundation –

LR’s social purpose
Engineering a safer world
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Thank you
Brijesh Tewari

E: brijesh.tewari@lr.org