Evergreen Marine receives 4.75 stars out of 5 on environmental reporting
As we said in a previous review, some Asian liners are doing quite well on environmental reporting: they have published Sustainability Reports for more than two or three years in a row, and, probably, trying not to fall too behind European companies, have done meticulous work with plenty of information and, above all, more data than their European counterparts. Of course, maybe just now, they begin to realize that their reports are overpassing in quality those of some European companies. For Gliese Foundation, Evergreen Marine tops all Asian companies, staying second at the global level only to Maersk. Maersk's review will be the last one of our series of twelve we are releasing.
On the Sustainable Development Goals (SDGs), Evergreen Marine does an average job. It considers that its activities impact SDGs 3, 4, 5, 8, 12, 13, 14, and 17, without going into the targets the company is having an influence on (some other companies do that) and jump directly into the actions being implemented to impact on each of the SDGs. For instance, regarding SDG 13, Climate action, they report the following: "1. Build a green container fleet, 2. Equip the fleet with the Load Stability Calculation System and Weather Navigation Information (WNI) System to optimize the sailing speed and monitoring of fuel consumption. 3. Monitor sailing schedules and adjusts sailing schedules and calling order flexibly. 4. Improve the operations efficiency of terminals. 5. Adopt shore power. 6. Continue to install and use scrubbers in the fleet to reduce sulfide."
In a second challenge, Evergreen Marine does much better, and, with Maersk, they are the only two companies of all the twelve largest container carriers in the world doing that: reporting on climate change adaptation beyond the most traditional reporting on climate change mitigation. Why those two companies have the lead on that? They are the only two liners committed to reporting as Task Force on Climate-Related Financial Disclosures (TCFD) requires. Both are putting into practice knowledge that companies get when they know which green initiatives are worth joining (we have identified more than thirty green initiatives for the maritime industry, a good number of which are not "very useful" to say it euphemistically).
We include several paragraphs to illustrate how Evergreen Marine is already mastering the tools of the TCFD to report on climate change because we consider that this section, with the inclusion of a very good section about suppliers, and plenty of data, are the three main reasons why Gliese Foundations is given such a high score to Evergreen Marine.
Evergreen Marine goes even further, talking about risk management for climate change in the framework of the TCFD. "Risk management and response measures for climate change. Under the increasing threat of climate change, Evergreen Marine identifies the opportunities and challenges brought about by climate change and extreme weather, referring to the Task Force on Climate-related Financial Disclosures (TCFD). Furthermore, in response to severe weather that affects ship safety, such as rough sea conditions, typhoons, sea fog, sea ice and extremely low atmospheric pressure, are included in Evergreen Marine's 'risk management' assessment system. To set up disaster prevention plans, monitor the performance of preventive measures, and eventually reduce the risk of climate change the relevant budgets are made." It says that has in place a "risk management assessment system." We certainly do not know how good and complete that system is, but no other of the ten companies we have reviewed mentions anything close to it.
In the following paragraphs, Evergreen Marine uses the four elements of the TCFD to highlight its actions: "In response to the possible impact of climate change, Evergreen Marine has established the following operating procedures based on the four core elements, namely, governance, strategy, risk management, and indicators and goals: 1) Governance: Climate change issues are identified, planned, and promoted by the executive secretary of the Project Dept. and the Environmental protection Issues Team. Quarterly meetings are held to report the progress and goals of climate change management to the Board of Directors every year. 2) Strategy: The duration of impacts is divided into short-term, medium-term, and long-term spells. We conduct an operational risk assessment on the scope of impact and draw up countermeasures for the aftermath of the impacts. 3) Risk management: The CSR Committee identifies and assesses the transition risks of policies and regulations, technology, market and reputation and the physical risks of acute and slow-moving climate change, and takes mitigation or adaptation actions based on the degree of risks. 4) Indicators and Goals: Indicators and goals are set in line with climate change policies and risk management. The greenhouse gas emission factors are based on the IMO MEPC / 29 / 18 / Dec. 1989 and the 'Emission Factors for Greenhouse Gas Inventories 6.0.4' announced by the Industrial Development Bureau, Ministry of Economic affairs. Besides, Evergreen Marine makes full disclosures of water resource management and waste management and tracks improvements on a regular basis."
And let's see how Evergreen Marine tackles one of the key risks of climate change: "Issue: Increased frequency of extreme weather. Type of risk: Physical risks. Duration of impact: Short / medium / long-term. Negative impact and financial impact: 1. The affected safety of ships, crews and cargoes increases operating costs. 2. Affected ship schedules and inland transportation schedules result in increased costs for customers and the Company. Opportunities and benefits: 1. Develop weather and sea condition monitoring and navigation, optimize ship schedules, and improve operational efficiency. 2. Develop ship position monitoring technology and improve marine tech standards, 3. Strengthen the Company's resilience to extreme weather and increase customer trust and support." Yes, there is some repetition, but there is also some new information. And continues: "Response measures: 1. Use the fleet safety management system (FMS safety) provided by WNI Weather Navigation; 2. Plan ship schedules and port calls efficiently based on climate monitoring data; 3. Improve loading/unloading efficiency to reduce berthing time at terminals; 4. Keep track of disasters proactively, and urge suppliers to float countermeasures such as route changes; 5. Pay close attention to changes in navigable water level restrictions issued by the Panamanian authorities, adjust maximum loading TEU flexibility according to change in navigable drat and adjust fleet deployment if necessary." And Evergreen Marine closes that section with numbers: "Actions: 1. In 2019, WNI gave advice to 272 ships on the avoidance of 29 typhoons. 2. In 2019 there was neither damage caused by typhoons, explosive cyclones, sea ice, or sea fog nor major customer complaints against inland transportation."
We also highly value that Evergreen Marine deals with the transit along the Northern Sea Route without any hesitance: "In 2019, we signed the 'Declaration of Refusal to Sail the Arctic Circle' to support the 'Protecting the Arctic' initiated by the Ocean Conservancy and Nike." It may sound a minor thing, but it is not at all: Evergreen Marine has taken a decision that neither COSCO, nor Yang Ming, ONE, HMM, or PIL, the other Asian liners have taken.
Then it comes what Evergreen Marine calls "supplier management," something in which they are also between the few leaders on the topic. It starts with a general statement (very similar to what other companies have): "To effectively manage suppliers, Evergreen Marine has drawn up the 'Supplier Code of Conduct,' which each supplier is required to comply with, and the principles of supplier selection that incorporate the aspects of CSR practice such as environmental protection, labor, human rights, and social impacts. How Evergreen Marine cooperates with each supplier is regulated through relevant instructions." It seems that all is limited to another code of conduct that suppliers must sign but that liners do not monitor.
Given our emphasis on environmental issues, we take here the following case: "For ship repairers and ship recycling shipyards, Evergreen Marine attaches great importance on suppliers' labor rights and environmental safety, and requires suppliers to provide employee insurance (labor and health insurance), personnel training, and occupations safety management." Once again, it may sound superficial, but it continues:
"Evergreen Marine's occupational safety regulations for repairers and suppliers: 1-13. During the selection of suppliers, the Company also encourages suppliers to provide CSR-related documents and 'Environmental Protection Agreement' and incorporates corporate social responsibility into contract provisions. Although new suppliers were fewer in 2019 than in 2018, the ratio of new suppliers that underwent CSR screening increased from 53.1% to 90.9%, showing that the Company has gradually achieved results in implementing CSR screening." We can see that Evergreen Marine is not bluffing but going more in-depth than most of the other liners on its deals with suppliers.
And there is still more: "Supplier evaluation: The annual supplier evaluation is conducted every year, appraising each supplier's service quality, professionalism, flexibility, product delivery time, and price, as well as its CSR practice in environmental, social (labor and human rights), and economic aspects. The average result of the supplier evaluation in 2019 was positive and the requirements were met in every category. Aspects of supplier evaluation: To examine the implementation of suppliers' corporate social responsibilities, the Company distributed questionnaires about suppliers' environmental, labor practice and human rights, and social responsibilities in 2019. A total of 129 questionnaires were retrieved. Environmental assessment: yes/no. Environmental policies, Environmental management systems, Environmental accidents." What Evergreen Marine is doing on that front is much deeper than what most liners do.
Finally, let's move into GHG emissions. Before talking about the data, we can state the obvious: Evergreen Marine, like all the other liners, tend to emphasize as its primary measure to reduce CO2 emissions, the ordering of much more efficient newbuilds: "From S-type ships delivered in 2005, L-type ships in 2012, and B-type ships in 2017, to F-type ships in 2020, Evergreen Marine has been adamant in using state-of-the-art technology to build new eco-friendly ships with outstanding performance." Regarding last year, it adds: "In 2019, Evergreen Marine signed contracts to build 14 ships, including 10 ships of 23,000 TEU and 4 ships of 1800 TEU, to further optimize the composition of the Evergreen fleet according to the ship revitalization plan. These new ships are expected to be delivered between 2012 and 2022."
And continues: "In terms of the ship revitalization plan, the Company plans to phase out a total of self-owned 36 ships including 20 medium and large ships and 16 small ships, within 5 years." And then it comes an ending that no other liner has: "Every year, Evergreen Marine collects the social responsibility reports and sustainability policies of the shipyards as the basis for evaluation." Asking for the CSR reports of the shipyards? If that is the case, one must congratulate Evergreen Marine, indeed. Regrettably, Evergreen Marine is silent about any final reflagging of those ships, and it does not say either if they are dismantled in real shipyards or beached in South Asia.
About the data, we have said that after we finish the twelfth review, we will be tackling some cross-sectional issues to all the companies, such as the materiality assessments, the SDGs, and the results of the GHG emissions. For the moment, we limit ourselves to include the table with the key figures:
Of course, there are still a few more issues in the report (waste, water, etc.) The last paragraph we want to include is the following: "Assistance in the PGGM (Pacific Greenhouse Gas Measurement) project. The PGGM launched by Taiwan in 2008 set up the largest atmospheric and maritime GHG monitoring platform in the world. Evergreen Marine joined PGGM in 2009 by assisting with the collection of atmospheric data at the marine boundary under 100 meters for research into global warming and climate change, of which the data is used to help understand the change in atmospheric CO2 concentration." It is an overstatement to say that the PGGM is "the largest atmospheric and maritime GHG monitoring platform in the world" but that Evergreen Marine has been involved into that project is commendable.
In summary, Gliese Foundation considers that Evergreen Marine has made a great effort with its last Sustainability Report. Three main issues influence our decision: a) the inclusion of the TCFD to analyze climate change risks, b) the elaborate way that the company deals with suppliers regarding the environment and other topics, and c) the thorough presentation of data, the most complete of all the twelve liners. Hence, why are we not given more than 4.75 stars to Evergreen Marine? Because Maersk does better despite the Evergreen Marine report has 82 pages while Maersk only 46. Stay tuned for our last review.
Gliese Foundation
December 15th, 2020
research@gliesefoundation.org