Updated guidelines on ESG reporting in the shipping and offshore industries

Lesetid: 3 min

The Norwegian Shipowners' Association (the "NSA") released an updated version of their guidelines for ESG reporting in the shipping and offshore industries in November 2021, first published by the NSA in February 2020. The guidelines provide an update on trends and regulatory developments within ESG, including the Norwegian Transparency Act and new requirements from the financial industry.

Guidelines - not a reporting standard

The purpose of the guidelines commissioned by the NSA is to clarify the sustainability reporting for the shipping and offshore companies, making it easier to meet the various requirements and expectations for relevant information from the companies. The NSA will update the guidelines regularly to ensure that changes in expectations, standards and requirements are accurately reflected.

One should note that while the guidelines aid ESG reporting, the guidelines do not constitute a reporting standard. What the guidelines do is highlighting the three initiatives that stand out as landmarks in the global reporting landscape:

  • Global Reporting Initiative (GRI)
  • The Value Reporting Foundation: Integrated reporting and the SASB standards
  • UN Sustainable Development Goals (SDGs)

For listed companies, please note that Oslo Stock Exchange and Euronext have published their own guidelines for ESG reporting, underlining the need for reporting to be based on material sustainability topics and the standards described above.

Best practice reporting

The guidelines highlight the issues typically deemed as material for the shipping and offshore industry, building on a set of material issues specifically identified for the maritime industry by the GRI, SASB and the financial sector.

The aim is to provide harmonization of reporting across the industry and ensure, as a minimum, a focus on issues deemed material to the industry based on trustworthy sources.

"Generally, the financial markets prefer ESG reporting that outlines clear ESG targets, performance against those targets – preferably over a 3-5-year horizon – and relevant governance information on how material issues are managed by the company. A critical success factor is to focus on material ESG topics for the company and its stakeholders; the company needs to assess which topics are material to them, the industry and its stakeholders, and avoid lengthy reporting on less relevant topics."

A proposed set of indicators

The guidelines set out a list of environmental, social and governance (ESG) indicators recommended by the NSA. For new reporters and as a minimum for all members, the NSA has highlighted the following indicators:

  • Environmental: Scope 1 GHG emissions, Carbon Intensity Indicator (CII), GHG emission management, energy mix, responsible ship recycling, number and aggregate volume of spills and releases to the environment, and waste generated.
  • Social: Lost time incident rate (LTIR) or lost time incident frequency (LTIF), labour rights and port state control.
  • Governance: Corruption risks, fines, policies and targets.

The guidelines provide further details on the accounting metrics, measurements and reference to relevant reporting standards, principles, regulations, etc.

Our comment

Shipping and offshore companies will benefit significantly from having a proactive approach to ESG reporting and implement this as part of the companies' strategy and risk mitigation. The area of ESG reporting is becoming increasingly complex, and the guidance from the NSA is a welcome initiative for the industry.

Contact us if you would like to discuss further the implication of the guidelines or the consequences of the new Norwegian Transparency Act.

See also our previous newsletter on the Norwegian Transparency Act here.