Legal update from Triton 3-2019
The sustainable approach
I have spent some time recently reading about sustainability, these days commonly referred to as ESG (Environmental, Social and Governance). One can of course choose from a wide variety of approaches to this complex issue. I however prefer the following: all business has an impact on society and therefore has a social responsibility to fulfil. Ultimately this is a question of corporate identity and values. How do we as a company want to be perceived?
Credibility is clearly a key word. Merely adopting documents with beautiful words and over-ambitious programmes can be counterproductive – what other facades does the company then put up one might ask? Less is probably more, as long as it’s genuine. Commitment must start at the top of the company and there must be an honest buy in.
The legal aspect
There are many reasons why companies need to address ESG risks - avoiding reputational risks and having the ability to attract the best people are but a few. However, there is also increasing pressure from legislators on businesses to address ESG risks. It is clear that, ultimately, it will be necessary to properly address these risks to protect the business licence.
The Swedish Financial Supervisory Authority has stated that sustainability is part of the authority’s supervision, noting that some ESG risks – such as climate – are financial and must be managed even under present legal requirements. The authority concludes that, in order to meet ESG challenges, society will have to undergo major changes and the financial sector plays a key role in identifying, measuring and pricing risks associated with the major risks that the fundamental changes will pose. Disclosure of ESG-related information and ESG thinking in investments are key tasks for the sector.
What can shipping do?
Today, shipping is already a major positive contributor towards a sustainable world in that it is the most energy efficient mode of transportation. However, work with ESG issues can be improved. Shipping is a powerful and capable industry which has the potential to make a great, positive contribution.
The Norwegian Shipowners’ Association has identified the following target areas for shipping:
- Act on the Paris agreement
- Build sustainable communities and infrastructure
- Protect life in the oceans
- Create a sustainable future for the ocean economy
- Promote responsible practices
One reflection is that there may be an advantage to take positive action voluntarily instead of waiting for legislators to impose mandatory requirements. As far as the Club is concerned, our approach towards ESG issues is at present codified in the Club’s sustainability report. I believe it gives a good introduction to the Club, and to our role in society
Previous Legal Corner articles
The Strait of Hormuz and the law - Triton no 2 2019
Sanctions, The long arm of the law - Triton no 1 2019
Improved visibility in the muddy waters of sanctions - Triton no 3 2018
Redefining the role of the lawyer - Triton no 2 2018
IMB membership for FD&D members - Triton no 1 2018
Adaptability vs continuity - Triton no 3 2017
The importance of context - Triton no 2 2017
The strive towards clarity - Triton no 1 2017
Use your head - Triton no 3 2016
Leading OW Bunker case finally decided - Triton no 2 2016
Guidelines on place of refuge - Triton no 1 2016
It’s not what you do, it’s how you do it - Triton no 3 2015
Reflections - Triton no 2 2015
A wreck removal convention ahead - Triton no 1 2015
We need to talk - Triton no 3 2014
What it is all about - Triton no 2 2014
The Shipping Blue(s) - Triton no 1 2014