Is ESG shipping’s most misunderstood acronym?

It has been described as a game changer that will reshape the business landscape, becoming a driving force behind investment decisions, with impact felt in ways that will touch not just financial institutions but also their interactions with clients and suppliers, their distribution models and human resources policies.

No, it’s not the carbon intensity indicator (CII), nor the energy efficiency existing ship index (EEXI) but environmental, social and governance (ESG) a means of, well, demonstrating that the business demonstrates good practice and a desire to show continuous improvement.

ESG has to date, had its most tangible impact in the banking sector as lenders have sought to move away from projects that produce carbon emissions, risk potential exploitation of labour and lack appropriate standards for corporate behaviour.

The trend toward using ESG as a benchmark and rating mechanism is not going away. Indeed, its use in shipping is about to get a shot in the arm.

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