MSC receives 3.5 out of 5 stars on environmental reporting
The 138-page Sustainability Report by MSC has one feature that only one more of the companies that submitted a report for the period from January 1st, 2019 to December 31st, 2019 shares—there is almost no data, no numbers, no cold and objective numbers (except for some about its assets in pages 8 and 9, and more numbers in the chapter that maybe by mistake was called Social Inclusion because it does not deal with social issues but with intermodal, freight corridors, and other logistics issues). The environmental section, for instance, has 32 pages, but one finds only a few numbers about the company on page 63. That is all. Nothing as an appendix, either. Environmental reporting is only partially about narrative, about telling stories, but it is mainly about presenting objective numbers through which the public and the stakeholders of the company can gauge the environmental advances of a company. MSC is the second largest liner in the world, transporting about 16% of total world cargo. MSC has been called for years a very secretive company since it is a family emporium, a privately own emporium, and, regrettably, we can see that on its environmental reporting: despite releasing a 138-page report, one can feel that secrecy since contrary to all the other liners, there are almost no numbers related to environmental reporting. MSC ignored one of the most basic tenets of company reporting—to provide data, because, without data, one is left with narratives, stories, anecdotes. Even lesser-known and smaller companies such as Wan Hai are presenting much more environmental data.
We would have been given only 3 stars out of 5 to MSC; however, the narrative in different parts of the report is laborious, engaging, story-telling, so we consider that 3.5 stars are a fair score. We thought about shaving 0.5 stars to the companies that did not release their Sustainability Reports during the first semester of 2020 (six months should be more than enough to publish their reports). That would have affected COSCO (July), Evergreen Marine (August), and CMA CGM, Yang Min, Wan Hai, and MSC (September). We did not find the COVID-19 pandemic as an excuse for the late release when even heavily battered cruise companies such as Aida, Genting HK, Royal Caribbean, TUI, or Virgin, released their Sustainability Reports during the first semester. However, given that this is the first year we are writing our independent reviews, we decided to ignore the date of the release even if the prompt release by Maersk (February) or in good timing by Hapag-Lloyd and ZIM (April) would have deserved at least those 0.5 stars difference. But that is a criterium we will apply until next year: companies that will release their reports during the first semester versus companies that will release theirs during the second one.
Besides the lack of numbers, the MSC Sustainability Report lacks information in other areas where most liners are providing information. For instance, the report argues that the company has carried a materiality assessment; however, contrary to any other company that has done that exercise, MSC does not reveal the matrix, only a vague figure on page 31. The matrix is important because it shows the company's priorities and its stakeholders to environmental and other sustainability issues. Regarding the impact on the Sustainable Development Goals (SDGs), MSC makes the mistake that most liners do: believing that is impacting all 17 SDGs, when, as we said in the review about HMM, no company in the world can claim that is impacting in all of them (the MSC report presents the SDGs impacted at the beginning of each chapter; if one puts all of them together, it results that the company is impacting all of them).
Different sections of the report, however, are quite interesting. First, the section about IMO 2020 was quite illustrative. Contrary to other liners that are relatively brief on this topic, MSC provides more information into the challenges that being compliant with the new regulation implied for its fleet: "Fuel tank preparation was a major focus. Provisions were made for the emptying of main and overflow fuel tanks and the transfer of any remaining heavy fuel oil (HFO) to sludge tanks. Across the MSC-owned fleet approximately 4,000 fuel tanks, including storage tanks, and settling and service tanks, required cleaning to be ready to bunker 0.5%S fuel oil (...) Fuel tank cleaning at MSC began with the recruitment of dedicated teams from MSC Crewing Offices and selected vendors. More than 300 personnel were engaged worldwide in the onboard task of cleaning fuel tanks in the 10 months leading to implementation of the IMO 2020 regulation. Tasks related to tank cleaning and preparation were mostly carried out during navigation of the vessel, to avoid service disruption. MSC worked with a qualified maritime expert consultancy to develop a Ship Implementation Plan (SIP) for each vessel to ensure full and timely compliance with IMO 2020."
Another section that we found particularly useful is the one related to TiL. Liners tend to omit references to the terminals they own or make only some passing comments. MSC presents one of the best sections we have found about terminals, and with numbers! What a pity that the work for the core of the business—the fleet—was much weaker. Here are some excerpts: "TiL records and monitors a range of energy efficiency indicators to ensure that its strong business performance runs in parallel with responsible environmental management. For example, TiL has achieved a 14% increase in the number of TEU moved per quay metre and a 16% increase in the number of TEU moved per hectare of yard space, since the end of 2016. Fuel consumption per move at TiL has been reduced by 25% since 2017. In a further reflection of improvements in operational efficiency, berth productivity, measured in terms of the number of moves per hour, has increased from 55 in 2016 to 60 in 2019 (...) The optimisation of operations by TiL has wider benefit for emissions reduction, beyond the company itself. For instance, average truck turnaround time at TiL terminals has been reduced by six minutes (15%) since 2016, meaning less time idling or queueing."
One more interesting sections is the way the report covers marine issues that other companies do it lightly since they seem to be marginal. For cetaceans, of course, propeller cavitation is a critical issue, not a marginal one, since it is the main cause of underwater noise: "Although the propeller boss cap fins (PBCF) are primarily known for their energy-saving merits, as explained on page 65, their installation reduces propeller cavitation and consequently underwater noise. This is a positive and noteworthy secondary effect of MSC's propeller retrofit campaign, started in 2012. Having confirmed the performance of the PBCFs, MSC Shipmanagement decided to install them on the entire managed fleet as part of the propeller retrofit programme."
And something we could not agree more and in which MSC and CMA CGM are taking a much bolder step than Maersk is the transit through the Northern Sea Route. The text is brief and to the point: "MSC will not use the Northern Sea Route for container shipping. MSC prides itself on a long nautical heritage and passion for the sea; entry into these Arctic waters would contravene these deeply held principles. We believe that efforts should be focused on limiting environmental emissions and protecting the marine environment, and that the 21 million containers that we move each year can be transported through existing shipping global trade routes."
In the chapter about short-sea shipping, inland shipping, and freight corridors, there is also interesting material since shifts from trucks reduce fuel consumption and positively impact the environment: "MSC, through its subsidiary MEDLOG, supports the shift from trucks to alternative modes of transport (...) In particular, we are enhancing our inland depot network in strategic areas to be able to use inland waterways such as rivers and canals (...) through our investments in barges, we are promoting energy efficiency, supporting the reduction of congested corridors, and minimising negative externalities for populations. Additionally, barges allow us to further increase the safety level of operations especially when transporting dangerous goods (...) Where no inland and/or intracoastal waterways are available, MSC promotes its intermodal transportation solutions through its railway network to achieve the same goals." And for the case of Europe: "Today, MEDLOG cooperates with a wide range of suppliers offering more than 150 weekly barge sailings which are used to transport containerised freight via rivers and waterways. In 2019, approximately 120,000 containers were transported using barges instead of trucks via the ports of Antwerp and Rotterdam." The treatment of the feeder services is one of the best we have found among container carriers.
What about MSC decarbonization strategy? Well, basically to follow the path that the IMO decides, nothing more than that: "We support the 'ambitious' [these internal quotes are ours] emissions reduction targets that have been set by the International Maritime Organization (IMO) and reduction of total annual GHG emissions from international shipping by at least 50% by 2050 compared to 2008." There is support for some biofuels, and then: "There is no single solution to emissions reduction from shipping; a variety of approaches is required. MSC therefore embraces a 360-degree approach to improving efficiency, deploying a variety of solutions focused on significantly improving environmental performance." Nobody denies that decarbonization will not have only one solution, but the companies leading the effort, advancing faster than IMO, have priorities. To pursue a 360 degrees strategy is, let's be frank, the same as not having a strategy. In brief, the decarbonization ambitions of MSC could not differ more from the ambitions of the other giant, Maersk. One curious detail says it all: while Maersk is a founder member of the most aggressive decarbonization initiative in the shipping industry (the Getting to Zero Coalition), MSC highlights in its report its membership to a much weaker initiative (the Global Industry Alliance): the former tries to hold the bull from the horns, the second... not much really.
In summary, the lack of environmental data is the main weakness of the report by MSC. Words can tell many stories, but numbers are much more precise. The report also ratifies the weaker stand by MSC compared to other liners regarding the industry's decarbonization. However, the narrative in different sections of the report was excellent, one of the best we have found in the shipping industry (not only liners); specific cases were explained and blend with the main issues compellingly. We are convinced that MSC has all the material to produce a great report next year.
Gliese Foundation
October 24th, 2020