Identifying and managing environmental risks in the maritime sector

(1)

Kjersti Aalbu, 28.08.2012

Identifying and managing environmental risks

in the maritime sector

(2)

1. Environmental risks in shipping

2. Managing your risks

3. Three things you need to know

(3)

Environmental risks in shipping

A challenging decade

(4)

Shipping has a significant environmental impact

EXHAUST

GASES EVAPORATION _(VOC)

HAZARDOUS MATERIALS WASTE DELIVERED ASHORE SEWAGE AND GARBAGE BILGE

WATER ANTI-FOULING PAINTS BALLAST WATER OPERATIONAL/ OIL ACCIDENTAL

(5)

Environmental issues are key strategic drivers

 Demands for environmental performance

 Regulations have a high impact on business

 High levels of uncertainty

 Where should you place your bets?

(6)

Main environmental issues in today’s market

Emissions to air

Ballast water discharge

Grey water, waste handling, ship

recycling and noise pollution as runners up

(7)

What drives action?

Rules and regulations Customers and public Performance

National and local laws International conventions

Class rules

National and international standards

Rating and incentive schemes Beyond compliance

performance

Efficiency Reliability Ticket to trade Differentiation Competitiveness

(8)

Emission control areas - difficult choices ahead

8

What will future regulations look like? How will they all be enforced?

Will there be enough capital and resources available? What investment decisions

(9)

What will your response be?

 Identify alternative solutions

 Evaluate technical and financial risk

 Assess the environmental gains

 Benchmark system suppliers

(10)

Decision-making tool

(11)

(12)

Shipping: 2.7 % of global CO2 emissions

12

If international shipping was a country its

emissions would be on par with Germany

(13)

International shipping is in the spotlight

Shipping as key source of climate change mitigation and adaptation funding

Industry wide, global agreements SEEMP, EEDI, EEOI

Cut shipping CO2 emissions by 40% by 2050. Regional regulations

(14)

What is the most cost efficient? Now? In the long run?

 Ship design measures

 Ship operation measures

 Port operations

 Alternative power concepts

 Speed reduction

(15)

Ballast water – introducing invasive marine species

 Maintain safety and stability at sea

 3500 mill tonnes moved every year

 Introduction of invasive marine species

 Disruption of eco-system

(16)

Implications of the ballast water management convention

 Convention enters into force 12 months after ratification

 Requires:

• Ship-specific Ballast Water Management Plan

• Ballast Water Record Book on board

• Ballast water exchange (Regulation D-1)

• An approved ballast water treatment system (Regulation D-2)

• An International Ballast Water Management Certificate

• Confusion in the market

• Yard capacity could be a problem

(17)

Ship recycling - a challenging process

 Structural complexity

 Environmental, safety & health issues

(18)

(19)

Increasing responsibilities for different actors

 Ship builders

 Ship owners

 Recycling facilities

 Parties to the convention

Current speculations regarding entry into force: 2015 - 2020

(20)

Inventory of hazardous materials – industry best practice

DNV identified around 80 m3 of

asbestos on-board this vessel

(21)

(22)

What is risk?

A measure of how likely & how

serious an incident can be

(23)

Developing a risk based approach to the environment

Likelihood of

environmental aspect

Consequence of

environmental aspect

(24)

The new environmental risk reality

Environmental risk is not what it used to be

 Media threats

 Zero tolerance

 New business opportunities

(25)

Key business questions for environmental positioning

 Will we be regulated, when, and what for?

 Will we win or lose in a carbon-constrained world?

 Do we face brand, customer, or other stakeholder risk?

 How much will compliance cost?

 Can a positioning strategy manage risks/uncertainties?

 Are we making the right technology decisions?

 What are the risks of acting too early or too late?

 Can we create a competitive advantage for our company, and how?

(26)

Identify and manage your risks

26

Know where you’re exposed and take control where you need

 Environmental risk and materiality assessment

 Identify measures

 Beyond compliance

 Competency

(27)

Setting up an environmental management system

Policy Planning Implementation & operation Checking & corrective action Management review

(28)

Environmental risks in the supply chain – evaluating suppliers

Product

 What are the environmental impacts of the product?

 How does the product compare to alternatives?

Operations

 What are the key environmental risks in the company?

 Does the company have an

environmental management system in place to manage these risks?

 Does the company evaluate its own suppliers?

(29)

Clients are demanding environmental excellency

 Corporations worry about their supply chain

 40 – 60 % of a manufacturer’s emissions originate in the supply chain

 Environmental requirements in contracts

(30)

Example: Reporting on CO2 emissions

Increased client demand to respond to CDP Supply Chain information request

 CO2 emissions data

 Climate risk and its effects on the business environment

 Opportunities arising from climate change

 GHG emission abatement measures

(31)

Sustainability reporting – be honest

“…an organizational

report that gives

information about

economic, environmental,

social and governance

performance.”

- Global Reporting Initiative Clients, investors, and regulators would

like to know how you perform

 Increased demand for sustainability reports

 Reporting systems

 GRI, Global Compact, ISO, OECD, CDP, FTSE4G, DJSI

(32)

3 things you need to know

(33)

Regulations on emissions to air

will only become stricter -

(34)

Be proactive –

Use it to your advantage

(35)

(36)

Safeguarding life, property

and the environment

www.dnv.com