FAQ: Navigating Maritime ESG

That's why we've compiled this list of common questions and answers to show how taking ESG seriously can benefit your business in the long run.

Q: Who does maritime ESG regulation affect?

A: ESG regulation has a broad reach, affecting various stakeholders across the shipping industry, from companies and employees to investors and customers. Compliance and commitment to ESG principles have become essential for sustainable and responsible operations in the maritime sector, with larger companies needing to take the most immediate action. However, considering ESG compliance is necessary for everyone, regulations will soon begin to affect more and more smaller and medium-sized companies.

Q: What impact will ESG have on my company?

A: ESG regulations can significantly impact your business’s reputation, operational costs, access to capital, and market competitiveness. Embracing ESG with a carefully considered plan can lead to long-term cost savings, operational efficiencies, sustainability and profitability.

Q: What are the environmental aspects of ESG, and how could they affect my company?

A: Environmental aspects include emissions, energy efficiency, waste management, ship recycling and pollution. ESG regulations related to the environment may require GHG emissions reductions(Scope 1, 2, and 3), fuel efficiency improvements, and more eco-friendly practices, impacting your fleet and operations.

Q: What are the social aspects of ESG, and how could they affect my company?

A: ESG regulations often require companies to prioritize employee rights, well-being, diversity and inclusion, as well as occupational health, safety and environment(HSE). Compliance could entail changes in HR policies and safety measures.

Q: What are the governance aspects of ESG, and how could they affect my company?

A: Governance aspects of ESG encompass board structure, responsible management, transparency, ethics and anti-corruption. Understanding these regulations can help ensure proper corporate governance and compliance, which is crucial for investor confidence.

Q: How can my company measure its current ESG performance and progress?

A: Implementing Key Performance Indicators(KPIs) related to emissions reduction, diversity metrics, and governance practices can help measure ESG performance. This data capture and reporting process can be complex and costly to undertake in-house. Solutions such as Metizoft’s can create clear and consistent ESG reports based on the latest requirements relevant to your company. We offer a range of flexible, scalable software packages tailored to your company's size and requirements, from readymade templates to complete services.

Q: Are there financial risks and opportunities associated with ESG compliance?

A: ESG compliance can affect operational costs, insurance premiums, and financing options, with many lenders now offering ESG performance-linked loans. Failing to address ESG concerns can lead to financial risks, while proactive ESG strategies can open up new investment opportunities and partnerships.

Q: Are there specific ESG reporting requirements my company needs to adhere to?

A: Yes, depending on your company size, market and stakeholders, you may already need to report on specific ESG metrics. Below are some of the key ESG regulations that are already in place or are soon to take effect.

EU SRR - Inventory of Hazardous Materials

• Vessel type: All above 500 GT
• Geography: Ships that call at EU ports
• Timeline: Active (est. 2013)

HKC - Inventory of Hazardous Materials

• Vessel type: All commercial vessels above 500 GT
• Geography: Global
• Timeline: From around the 26th of June 2025

EU MRV - Monitoring and reporting of CO2 emissions

• Vessel type: Cargo and passenger vessels over 5,000 GT
• Geography: loading or unloading at ports in EEA
• Timeline: Active (est. 2018)

EU ETS - Emissions Trading System

• Vessel type: Cargo and passenger vessels above 5,000 GT
• Geography: voyages departing from or arriving at an EU port of call
• Timeline: 40% of verified emissions in 2024, 70% in 2025 and 100% in 2026
• Upcoming changes: Offshore service vessels above 5,000 GT to be included from 1st of Jan 2027

CSRD and ESRS - Sustainability reporting

Full version for the accounting year 2024 for NFRD companies that:

• Are listed on a regulated market
• Have balance sheet total exceeding 25 mEUR
• Have net turnover exceeding 50 mEUR
• Employ an average of 500 full-time equivalents throughout the accounting year

Full version for the accounting year 2025 for large companies, that is, those which exceed at least two out of three:

• Balance sheet total: 25 mEUR
• Net turnover: 50 mEUR
• An average of 250 full-time equivalents throughout the accounting year

Simplified version for the accounting year 2026 for listed small and medium-sized companies, that is, those which exceed at least two out of three:

• 900,000 EUR in net turnover
• Balance sheet total: 450,000 EUR
• An average of 10 full-time equivalents throughout the accounting year

But do not exceed at least two out of these three:

• Net turnover: 50 mEUR
• Balance sheet total: 25 mEUR
• An average of 250 full-time equivalents throughout the accounting year

Q: Is the SFDR relevant to the maritime industry?

A: The SFDR applies to all EU-based investment firms, funds and advisors. It determines how these companies should undertake sustainability reporting across industries and classify their environmental objectives. If your company is currently owned by one of these entities or wants to raise capital with one, you will likely have to report against these regulations.

Q: What parts of the EU taxonomy apply to my company?

A: For the maritime industry, there are especially four topics that are relevant in the current version of the EU taxonomy:

• Manufacture of low-carbon technologies for transport
• Inland passenger water transport
• Sea and coastal freight water transport and vessels for port operations and auxiliary activities.
• Sea and coastal passenger water transport

Q: What are the potential benefits of proactively addressing ESG concerns?

A: Proactive ESG initiatives can enhance your company's reputation, reduce risks, attract investors, improve access to capital, and create operational efficiencies.

Q: How might upcoming ESG regulations impact our supply chain and logistics partners?

A: Upcoming ESG regulations may require transparency and adherence to ESG principles from your supply chain partners that differ from your own direct regulatory requirements. This could affect procurement decisions, risk assessments, and collaboration strategies.

Q: What steps can we take now to prepare for future ESG regulations?

A: Our team of ESG experts stay on top of evolving regulations for you, helping you navigate the specific requirements of your company. Let Metizoft's professionals handle the changing regulatory landscape while you focus on your core business.