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Yang Ming receives 4.5 stars out of 5 on environmental reporting

Monday, 23 November 2020 | 13:00

The format of Yang Ming’s Sustainability Report looks old-style in some of the chapters (and still uses the old fashioned name of CRS for its report), the narrative could be broader and deeper because, besides fuel consumption and GHG emissions, there is not much more on the environmental side. Why, then, is Gliese Foundation giving 4.5 stars out of 5 to this report? A straightforward reason: of all the Sustainability Reports of the largest liners in the world, the report by Yang Ming is the one that provides the most exhaustive set of data on CO2 emissions. Contrary to MSC of Hapag-Lloyd, which have longer reports, full of narrative, but with very scarce data, Yang Ming has clear that reporting is almost synonymous with data; it could be sparse in words, but numbers are naked truth. If the shipping companies were to provide as much data as Yang Ming next year, we would conclude that the shipping industry has leapfrogged in its environmental reporting. Regarding the narrative, the communications specialists inside each company could take the path they would like, but it would be as if all were stepping into hard soil rather than walking on swampy mud due to the lack or poverty of data.

Regarding the current measures to reduce fuel consumption and CO2 emissions, Yang Ming has a similar stand to most of the other liners: besides the use of energy efficiency equipment and applications and the typical maintenance or improvements such as hull cleaning, propeller polishing, and retrofittings, the hope relies on larger and more efficient newbuilts: “The new-built energy saving fleets are capable of reducing pollution emissions and improving efficiency with further cost savings as well. Furthermore, long-term-chartered vessels with higher charter rates have been redelivered to owners at the expiration of contracts (redelivery of seven chartered vessels in 2018 and 2019 respectively and four chartered vessels returned in 2020). The gradual fleet replacement continues to strengthen the competitiveness and diminish the operational cost due to the significant improvement on business and cost expenses (…) In the new service layout of 2020, THE Alliance members continue to deploy the ultra-large containerships to realize economies of scale in ship operations and enhance the efficiency of bunker saving.” However, we have not seen a company (and Yang Ming is not the exception) that separates the fuel consumption on its main components to estimate the shares due to navigation optimization, improvement of ship equipment, and addition of gigantic and more efficient newbuilts. Yang Ming and the other companies tell us that they use a mix of “ingredients” (measures) that, in the end, reduces fuel consumption and CO2 emissions per TEU-km, but all of them say nothing about the contribution of each “ingredient” in the final result. In other words, it is a dark box of which we only know the two final numbers: thousands of tons of fuels and thousands of tons of CO2 emissions. One wonders if either they do not want to share the contribution of each “ingredient” or if they themselves have no idea about the percentage that could be attributed to each “ingredient” in the final reduction of CO2 emissions.

Regarding another number, Yang Ming is among the handful of companies that tell the number of vessels of the share of its fleet that has been retrofitted with scrubbers: “Once the fleet with scrubber retrofit has been completed and deployed to the service, the estimated ratio of scrubber retrofitted fleets is 27% and the rest shall use the low-sulphur fuel.” How simple is to provide such a number, but believe it or not, most liners did not.

Contrary to most other companies that perform three separate sections: materiality assessment, SDGs, and specific environmental measures adopted by the company, Yang Ming was able to join the first with the second and the second with the third with great perfection like an skillful seamstress while most of the other companies treat those topics as separate assignments. Let’s see one case from Yang Ming. From the materiality assessment, it concludes that “Energy management” is relevant and relates to GRI 302-4 “Reduction of energy consumption” and GRI302-5 “Reductions in energy requirements of products and services.” Later they relate this topic to SDG 13, “Climate action” (here are certainly two weaknesses, it should have included SDG 7 also, “Affordable and clean energy,” and mention not only the goals–just that is too general–but also the targets and elaborate on how is that the company impacts on those targets). And, from there, they move to the “Managerial policy they took: “Energy saving equipment retroffit for vessels; plan an efficiency environment protection fleet.” And to the actions they adopted during 2019: “1) Deploy new-built eco friendly vessels; 2) Energy saving equipment retrofit for existing vessels; 3) YM has set up the project team to evaluate the feasibility of using LNG and will consider using LNG in the new built vessel program when technology is mature; 4) Construct vessel alert system monitoring abnormal M/E fuel consumption abnormal.” To finally close with future goal (2020-23): “Keeping in studying possible energy saving equipment and management.” One could argue about the completeness or deepness of each of the embroidery stitches, but what cannot but recognize that Yang Ming has done one of the best embroideries of all the companies with the materiality assessment, the SDGs, and the specific environmental measures they are adopting.

In some parts, the analysis is certainly quite superficial, almost like an exchange of words while preparing a coffee at the office: “[The entry into effect of EEDI Phase 3] will prompt shipping company to actively study on alternative energy, and in terms of overall performance, LNG as the most likely alternative energy source. Due to the high price of LNG, gas stations is not common, etc… so LNG is still in initial stage in shipping industry. YM has set up the project team to evaluate the feasibility of using LNG, and will consider using LNG in the new-built vessel program when technology is mature.”

Not all liners have requested “Independent Assurance Statements” by classification societies. Yang Ming asked one from DNV GL. The wording of those type of assessment always sounds cold and distant, as it should be, mainly that the classification societies have to assume that the raw data has been adequately collected: “On the basis of the work undertaken, nothing came to our attention to suggest that the Report does not properly describe Yang Ming adherence to the Principles. In terms of reliability of the performance data, in accordance with moderate level assurance requirements, nothing came to our attention to suggest that these data have not been properly collated from information reported at operational level, nor that the assumptions used were inappropriate.” Further below, DNV GL says: “A multi-disciplinary team of sustainability and assurance specialists performed work at headquarters and site level. We undertoook the following activities,” of which we copy two that we considered the most relevant for environmental reporting: “Review of supporting evidence for key claims and 2019 data in the report. Our checking processes were prioritised according to materiality and we based our prioritisation of the materiality issues at a consolidated corporate level; Review of the processes for gathering and consolidating the specified performance data and, for a sample, checking the data consolidation. Where financial data had been checked by another third party, and, where data of ships Green House Gases Emissions has been verified by DNV GL, we tested transposition from these sources to the report.” What matters for us is that a serious institution reviewed the processes and numbers. It would be ideal if next year, all liners request their Independent Assurance Statements. DNV GL, however, makes a significant mistake: “This is the first year that Yang Ming applied the frameworks provided by Task Force on Climate-related Financial Disclosures (TCFD).” First, Yang Ming never claims to have used the TCFD framework. Second, Yang Ming has not become a supporter of the TCFD (the only two liners at the moment are Maersk and Evergreen). Third, the TCFD framework requires more than what Yang Ming has done. An example of the latter is the following: Yang Ming provides information only about climate change mitigation (all the CO2 emissions reductions) but says absolutely nothing about climate change adaptation. In other words, we also give DNV GL only 4.5 stars since it does not deserve 5.

In summary, while some companies like MSC and Hapag-Lloyd provides almost no data on their Sustainability Reports but an extensive narrative, Yang Ming follows an opposite approach: a good set of numbers even if the narrative could have been broader and more profound. Yang Ming also does another thing very well: it follows a logic to link the materiality assessment results with the SDGs and the company’s policies and specific actions. Mainly for the first reason, we consider that Yang Ming deserves 4.5 stars out of 5: its data reporting could serve as an example for the other liners when, next year, they prepare their Sustainability Reports.
Source: Gliese Foundation

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