Wan Hai receives 4.5 stars out of 5 on environmental reporting
Wan Hai has been the smallest of the twelve largest liners in the world. Maybe for its marginal role, barely above the 1% of container cargo globally, it has not been invited to participate in any alliance. Wan Hai could be small but, regarding environmental reporting, it plays in the major leagues. Its Sustainability Report is well organized and meticulously treated; there are gaps, as with most others, but the reader would be gladly surprised by its quality. For Gliese Foundation, it deserves 4.5 stars out of 5.
The materiality assessment does not differ much from the other liners. The environmental topics are Energy, Effluent and waste, Safeguarding ocean health, Emissions, and Environmental regulations, with the first topping the list. Next, each of them is related to the specific measures that the company is adopting. In some cases, the measures are clear cut: "Smart electricity meters installed at our exclusive terminals in Kaohsiung Port and Taichung Port," as one of the energy measures, while in other cases, the answer is more rhetorical: "We support the demands of the International Maritime Organization (IMO) and the European Commission (EC) in energy management and raise efficiency," on the same energy issue. Once again, in the case of emissions: one clear cut: "In Emission Control Areas (ECA) of ports, our fleet switches to low-sulfur fuel oil," and another rhetorical "We support the Paris Agreement."
Contrary to Yang Ming, which was able to link the materiality matrix with the SDGs, Wan Hai follows a more traditional approach (as most liners do) by treating them as watertight compartments. Wan Hai, however, makes a reasonable selection of SDGs (some liners just copy and paste the 17 SDGs) and even goes to the stage of trying to precise the specific targets that the company was impacting (the SDGs have 169 targets). According to Wan Hai, its operations impacts about two-thirds of them: SDGs 1, 3, 4, 5, 6, 8, 13, 14, 15, and 17. One could argue if the selection of goals and targets is the proper one, but there is no doubt that Wan Hai tries to do its best and for each target includes measures being adopted by the company, even if in some cases the answer is insufficient or even a bit naive. For instance, regarding Target 11.6, which according to the UN says: "By 2030, reduce the adverse per capita environmental impact of cities, including by paying special attention to air quality and municipal and other waste management," Wan Hai replies: "Love Earth and Cherish Ocean: 100 Wan Hai corporate volunteers launched a beach clean- up campaign on October 5, 2019, to support environmental protection by taking action."
We find particularly useful the claim about the Tokyo MoU: "Wan Hai's internal statistics reveal that the deficiency ratio of our ships, when inspected at ports under the Tokyo MOU has declined year by year (...) Wan Hai's detention rates and defect rates are superior to the norms set by the Tokyo MOU and therefore has been classified as a high-quality shipping company." For us, the Paris and Tokyo MoUs statistics deserve a subsection in each of the Sustainability Reports of each major liner, which only Wan Hai does. Here we are not talking about general statements (e.g., the company complies with X or Y regulation, or the company has joined the V or W green initiative), but about data of real compliance by the vessels of each company calling at ports in particular regions of the world. This information is much more valuable than any environmental prize or any other of the many green claims that most companies make.
It is also interesting to see how Wan Hai venture into the realm of climate change adaptation despite it has not yet signed the Task Force on Climate-Related Financial Disclosures (TCFD), as Maersk and Evergreen have done. As part of a section called: "Climate change risks and opportunities," Wan Hai states: "Immediate risks: Climate is increasingly recognized and receiving attention around the world. During 2016-2019 for instance, within Wan Hai's scope of business, there were 23, 27, 29, and 29 typhoons respectively, which impacted 123, 162, 181, and 240 of our shipping routes. As the number of deep-sea typhoons keeps on increasing every year, this trend has an enormous impact on our shipping operations." Indeed, this paragraph could barely be considered part of a prologue to climate change adaptation, but at least it is a good beginning. Let's do not forget all liners also confront similar tropical storms, or their port terminals could be impacted by sea-level rise, but they do not say anything about it, as if climate change for the maritime industry would not be more than climate change mitigation.
Wan Hai goes into the supplier side as other liners, but without much success as most of them: the commitments are too general, not monitored, and not enforceable: "From 2017 onward, Wan Hai has required our suppliers to sign a 'Supplier Statement of Commitments' and has notified our suppliers Wan Hai's 'Supplier Management Policy,' reminding them that they must observe business ethics, labor rights, environmental, safety, and health (ESH) issues, and prevent and mitigate any potential negative social impacts. The contract termination or cancellation clause has been included to ensure compliance with Wan Hai's demands regarding sustainable management." There, among the other four topics, in a statement that Wan Hai has no way to verify, is also buried the word environmental.
Wan Hai is the only liner that quantifies the investment in energy conservation projects during 2019: "In 2019, Wan Hai invested NT$5,915,357,000 [about US$191.77 million] in energy conservation projects. Expenses covered our ships, terminals, and onshore offices." That sounds great, is not it? But then the full description makes clear that the right amount is "a bit" overestimated because more than 87% of that amount was for the purchase of low-sulfur diesel: "Consequently, in 2019, we invested NT$5,166,288,000 (approximately US$167.49 million) on low-sulfur diesel (A fuel). In addition, we have invested NT$99,862,000 (about US$3.24 million) to install the following equipment on our ships to reduce fuel consumption. Including mass flow meters, smart electricity meters, and energy-saving paint, etc. We invested NT$649,207,000 in measures to conserve energy and reduce carbon emissions at our terminals and offices." If all liners start to include the purchase of low-sulphur oil as energy conservation projects, the maritime industry will end as the industry with the most massive investments in energy conservation, at least in the paper.
While ZIM claimed that it donated ten containers during 2019, Wan Hai donated 17 in 2019: "Wan Hai has donated used containers that can be converted into steady, safe children's classrooms and clinics, thereby endowing depreciated assets with more surplus value. In 2019, we continued our collaboration with Step 30 International Ministries by donating 17 containers to benefit African school children in Kenya, Uganda, and Swaziland. As of 2019/12/31, the project has donated 49 and 4 40-foot/20-foot containers respectively in support of the Step 30 International Ministries to carry out its schooling project in Africa, creating an international partnership in the process." Well, 17 is not a big number, but at least it is bigger than 10.
The numbers of fuel consumption and CO2 emissions are shown in the next table. We consider that it was positive that Wan Hai required from the British Standard Institution (BSI) and Independent Assurance Opinion Statement. Regrettably, Wan Hai shows only numbers for the last two years (and certinaly for 2013 too).
Finally, it is excellent that Wan Hai is a member of the Getting to Zero Coalition; in fact, the representative of such a "small" company is the Co-Chair of the largest and most aggressive initiative currently in place to achieve the decarbonization of the shipping industry.
In summary, Wan Hai has done a much better job than much bigger companies. Its 2019 Sustainability Report is not coming out of anywhere as a great work: this is its sixth CSR Report (Wan Hai still uses that old-fashioned name). Wan Hai's progress has been continuous. The company may do not belong to any alliance, but its environmental reporting is good. Hence, 4.5 stars out of 5 seem more than a reasonable score.
Gliese Foundation
November 21st, 2020
research@gliesefoundation.org