Sustainability Management for Shipping Companies: Navigating Through the CSRD

The maritime transport industry plays a crucial role in global trade, yet it faces significant challenges in terms of environmental sustainability. As the industry evolves, the imperative to adopt sustainable practices grows stronger, driven by regulatory pressures, stakeholder expectations, and the inherent need to reduce environmental impact. In this article, we explore the specific challenges that the industry is facing to comply with the CSRD as well as its unique advantages.

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Maritime transport companies are facing unique challenges…

Understanding the industry's complexity:

Maritime transport is fundamentally a service industry, characterized by the shipping of goods across the globe. The nature of what is being transported will be relevant for the double materiality assessment of the CSRD and can vary widely. For example, transporting livestock or oil derivatives leads to fundamentally different Value chains and thus Impacts, Risk and Opportunity.

Facing very specific risks:

The CSRD demands that companies establish their list of IROs (Impact, Risks and Opportunities). Being part of the transportation and logistics industry, the maritime industry is tangentially involved in the supply chain of most other sectors, and inherits their impacts and risks. For example, transporting livestock requires consideration of animal welfare. Adding onto that, the maritime transport industry must include in their list very unique risks, such as piracy (impact on their employees + financial risk) or, in the case of fuel transportation, oil slick (impact on environment + financial risk).

Less immediate leverages for emission reduction than other industries:

Ironically, the most straightforward way for vessels to reduce emissions would be to stop operating all together. This is indeed not an option but then what? Another perspective is to compare maritime transport to alternatives like air transport, which reveals that shipping is generally more efficient and environmentally friendly. However, significant emissions still occur, primarily from fuel consumption. Technologies such as energy-efficient engines, alternative fuels, and electric propulsion systems are essential for reducing these emissions, but these innovations are large asset investments and take time to be popularized.

Maintenance and disposal: a great challenge

Despite their long lifespans (often exceeding 25 years), ships face ongoing maintenance, including dry-docking and repairs, to maintain efficiency and safety. But the challenge doesn't end there. Vessel disposal becomes a complex issue at the end of their service. Hazardous materials on board necessitate meticulous dismantling processes to safeguard the environment.

Yet the maritime transport industry also has its unique advantages

Existing regulatory compliance culture 

Even before facing the CSRD challenge, maritime transport was one of the most highly regulated industries. Compliance with international regulations, such as those set by the International Maritime Organization (IMO), is mandatory. These regulations cover a wide range of issues from emissions and waste management to health and safety standards. The industry must navigate complex international clearances and fuel quality standards, which vary significantly from one region to another​. While the CSRD may introduce new reporting requirements, existing regulations from bodies like the IMO provide a strong foundation. This established compliance culture, along with potential overlaps between existing and future regulations, can be leveraged to streamline CSRD implementation.

Existing data and reporting culture

Becoming CSRD compliant is often a data challenge and maritime operations are characterized by a culture of meticulous record-keeping, which is beneficial for sustainability reporting. Detailed logs of fuel consumption, emissions, and operational data provide a strong foundation for tracking and managing environmental impact. Unlike many other industries, where scope 3 emissions (indirect emissions) are predominant, maritime transport's primary focus is on scope 1 emissions (direct emissions).

Health and safety: Existing advanced practices 

The CSRD is not only focused on the environment but also on governance and society topics. The health and safety of workers is a topic to be addressed by any company but the maritime transport industry has a head start. Life at sea presents unique risks, and crew safety is paramount. The industry must adhere to stringent health and safety protocols to protect crew members, especially in high-risk operations such as handling livestock or operating in volatile weather conditions. The maintenance of vessels, including periodic overhauls and compliance with safety regulations, is critical to prevent accidents and ensure the longevity of the ships​.

How does the maritime industry comply with the CSRD?

Due to its complex nature, maritime operations demand tailored solutions. To navigate this landscape successfully, companies must invest in expert guidance and robust software tools. ROSE is positioned to support the industry in meeting these challenges and seizing these opportunities. Vroon, a global maritime leader, has selected ROSE to navigate the complexities of CSRD reporting. Our collaboration focuses on:

• Conducting a comprehensive Double Materiality Assessment, including value chain mapping and IRO identification.
• Deriving actionable insights from the ESRS to streamline data collection and reporting.
• Calculating Vroon's carbon footprint, with a particular emphasis on Scope 1 emissions.