ESG Reporting for Shortsea Shipping Companies: A pathway to avoid or to follow?
We are hosting an article from Mr. Nikolaos Liapis, President of the Hellenic Institute of Maritime Technology (HIMT) and Member of the Board of Directors of the Union of Short Sea Shipowners (HSSA), Mechanical Engineer of NTUA and a PhD holder of the School of Chemical Engineering of NTUA. We are glad and grateful for him sharing his expertise through this article.
“Environmental, Social, and Governance (ESG) reporting has gained considerable attention as a means for companies to showcase their commitment to sustainable practices. While large corporations have been at the forefront of ESG reporting, small and medium (SM) shipping companies often face unique challenges in adopting such reporting practices. This article examines the potential benefits and pitfalls of ESG reporting for SM shipping companies, especially those activating in shortsea trade, exploring whether it is a pathway to avoid or a path to success.
Short sea shipping companies play a crucial role as part of the supply chain management process. They provide an efficient and cost-effective transportation option for moving goods and products within a region or along coastal areas. While short sea shipping companies are not specifically obligated to reduce their carbon footprint, they are increasingly encouraged to do so due to their significant role in large supply chains.
Do they face challenges to follow the ESG path? They sure do- and a lot. Shortsea shipping is usually served by Small and Medium companies and as such, these companies may face resource constraints when adopting ESG reporting practices. The process requires data collection, analysis and reporting, which can be time-consuming and resource intensive. Limited staff and financial resources may pose challenges in dedicating the necessary personnel and systems to ensure accurate and comprehensive reporting.
ESG reporting relies heavily on data availability and reliability. Small and medium shipping companies may face difficulties in accessing relevant and credible data to report on their ESG performance. Additionally, measuring and quantifying certain ESG factors, such as social impact or community engagement, can be subjective and challenging without well-established metrics or industry standards.
Furthermore, ESG reporting can expose companies to reputation risks if the reported information is misleading or inconsistent with actual practices. SM shipping companies must ensure transparency and accuracy in their reporting to avoid accusations of greenwashing—presenting a false image of sustainability. Maintaining alignment between reported ESG practices and on-the-ground operations is crucial to building trust with stakeholders.
To make the most of ESG reporting, SM shipping companies must develop a clear understanding of their sustainability goals and capabilities. Strategic planning, resource allocation, and effective data management are crucial to overcome challenges and ensure accurate reporting. By embracing ESG reporting with diligence and authenticity, Shortsea shipping companies can navigate the pathway towards sustainability, capitalize on emerging opportunities, and contribute to a more responsible and resilient shipping industry.
As key players in the transportation industry, shortsea shipping companies have the opportunity to contribute to sustainability efforts and address environmental concerns. Reducing their carbon footprint, they can demonstrate their commitment to environmental stewardship. Customers, especially those with sustainability goals, increasingly prefer partners and suppliers that prioritize carbon reduction and sustainability. By proactively reducing their carbon footprint, short sea shipping companies can align with customer expectations, gain a competitive edge, and attract environmentally conscious clients. As the global focus on sustainability intensifies, businesses that fail to address their carbon footprint may face reputational damage and potential loss of market share.
Apart from the above, carbon reduction often goes hand in hand with improving operational efficiency. By adopting greener practices, through fuel efficiency, route optimization, and new technology, short sea shipping companies can enhance their operational efficiency, reduce fuel consumption, and increase profitability. It is worth noting that many short sea shipping companies have already taken steps to reduce their carbon footprint. These include the adoption of alternative fuels, optimizing vessel design for fuel efficiency, utilizing shore power, and implementing emission monitoring systems. Collaborative efforts within the industry, such as voluntary initiatives and partnerships, also play a role in driving carbon reduction measures.
Finally, we must also notice that today’s workforce, particularly younger generations, seek employers that align with their values and prioritize sustainability. By demonstrating a commitment to ESG principles, SM shipping companies can foster a positive workplace culture, motivating employees and attracting talent that is passionate about working for socially responsible organizations.
In conclusion, while short sea shipping companies are not explicitly obliged to reduce their carbon footprint, doing so brings numerous benefits. By taking proactive steps to minimize emissions, these companies can demonstrate environmental responsibility, meet market expectations, stay ahead of regulatory changes, improve operational efficiency, enhance reputation, and ensure long-term viability in a sustainable future.”
