In a few years Maersk has taken giant steps in transparency and integrated reporting
With its first sustainability report in 2010, Danish shipping giant Moller-Maersk took a big step, turning away from decades of muted external communications and jumping into not just reporting, but integrated reporting.
Now with its fourth such report, Maersk can congratulate itself on fairly quickly embracing transparency, leading to thorough, leading-edge reporting on most of the sensitive issues pertinent to the industry. The exceptions, perhaps, are a downplaying of its oil and gas business and the Arctic question, and an understandable reluctance to tackle society’s need to transition away from fossil-based, unlimited growth.
Maersk is moving into a new, four-year sustainability plan for 2014-2018. Central to the plan is a company-wide governance framework called Commit. Future sustainability initiatives are integrated into Commit, putting them on a par with the group’s other business goals and targets.
The bulk of the 2013 report summarises the challenges and achievements from 2010 to 2013, and the company’s moves to integrate sustainability into its business. At one point the word “concluding” is used to describe this journey, which seems a bit jarring until it becomes clear that Maersk means only that the first stage is definitively done.
Maersk’s new sustainability vision is to “unlock growth for society and the group”. Enabling trade, investing in education, and continuing with energy efficiency measures are Maersk’s three main strategies for doing this. Zeroing in on growth could be viewed as the group’s further integration of material and business issues. Conversely, it could be seen as ignoring the real need to move from a profit-and-growth-driven society to a purpose-driven, sustainable one.
Though Maersk’s 2013 section on materiality is small, primarily focusing on one graph, it does a great job of showing where risks exist along its supply chain. Materiality is also woven throughout the report, including a box in each section noting the business importance of each issue and a summary that serves in lieu of a glossary.
The 2013 report competently ties performance to many of the shipping industry’s material issues, in particular safety. Maersk had four fatal accidents in 2013, compared with 17 in 2012, and is targeting zero in 2014.
Corruption is another of Maersk’s top material issues and the company discusses it thoroughly. Maersk is open about the difficulties of reducing corruption to zero, but still hews to the goal of completely eliminating bribes and other corruption. About 9,000 employees received anti-corruption training in 2013, bringing the total up to one-third of the company’s 90,000-strong workforce. Maersk has also invested effort in promoting openness and best practice sharing between ship captains on ways to combat the common “facilitation payments” in shipping.
After corruption, oil spills are a top concern. Maersk had fewer spills in 2013 but one major incident resulted in more oil being spilled in total. In 2014 the company plans to put in place reporting and standards for its terminals business and a team at Maersk Oil in Kazakhstan will start analysing all minor leaks to mitigate bigger spills more proactively.
Maersk has made some impressive strides in efficiency – in fact, the company has embraced efficiency as a huge and ongoing business opportunity. That’s helped it reduce the CO2 footprint of individual containers by 34% since 2007 and 12% last year by consistently reducing fuel costs (saving $764m) through using fewer, larger vessels sailed in more fuel-efficient ways.
The group does not seem keen to lead on creating the essential societal bridge to a low-carbon economy. From the report it would seem that Maersk already considers shipping to be the low-carbon transportation choice. Even if that is true, embracing unlimited growth inevitably negates the relative benefits.
Maersk considers the relevance of Arctic “activities” to have decreased since 2012’s report. The company does not believe Arctic routes will be really commercially viable for container shipping for 15-20 more years. Still, subsidiary Maersk Drilling has an oil exploration licence off Greenland and has invested in Arctic-enabled rigs. It seems a bit odd – given this investment and the high visibility of Arctic drilling on the world stage – that Maersk puts the issue on the same level in the matrix as “chemicals” materiality for stakeholders and slightly lower than chemicals for itself.
Maersk seems to believe sincerely that trade and transportation, its core businesses, are always forces for good in society. In its 2012 sustainability report the company did a socio-economic impact study of Brazil to help make that case. This time, a similar study on China furthers the idea that shipping unlocks vast value creation.
Near the report’s end, stakeholders’ expectations for the group are frankly listed: more communication and more vocal expression and action on industry-critical issues such as climate change are high on the list. It will be interesting to see how Maersk responds in 2014.
|Follows GRI?||Uses G4 guidelines but no longer applies G4-specific disclosures.|
|Assurance?||Yes, according to International Standard for Assurance Engagements.|
|Materiality analysis?||Yes, for the group.|
|Goals?||Yes, new goals in 2014-2018 plan.|
|Targets?||To 2013 yes – new targets for 2014 – 2018 plan less clear.|
|Seeks feedback?||Yes, clean instruction for how to contact report editors.|
|Key strength?||Quantifying the business case for material issues.|
|Chief weakness? ||Less transparent on absolute reductions in emissions.|
|Pleasant surprise||Quality of writing and report design.|
|Level of integration||(1 to 5): 3.5 (same as last year).|
April Streeter is an associate with One Stone.
annual report CR Reporting Maersk oil and gas shipping