AMTOI organises enlightening session on ESG & its impact on logistics
AMTOI ESG Council organised a thought-provoking knowledge session on Environmental, Social & Governance (ESG) and its impact on the logistics sector on Wednesday, September 25, 2024 at the CCI in Mumbai. It was a truly enlightening session with distinguished personalities like Mr Rajeev Jalota, IAS, Chairman, Mumbai Port Authority; Dr Rakesh Kumar, President, Society of Indoor Environment & Former Director, CSR & NEERI; Mr Anurag Sehgal, Managing Director, Price Waterhouse Coopers; Mr Preetish Biswal, Climate Change Advisory, Price Waterhouse Coopers; Dr Meraj Inamdar, Senior Faculty, National Institute of Securities Markets; Mr R. D. Tripathi, CEO, MbPA Sustainability Foundation; and Ms Sivaranjani Subramaniami, COO, Environment Managing Centre Pvt. Ltd sharing their valuable knowledge and insights on the subject.
The programme began with Mr Vivek Kele, AMTOI ESG Council Representative, putting the subject of ESG in proper perspective. He explained that the need for ESG, which stands for Environmental, Social and Governance, was felt when people began thinking the business only motive should not be profit-making. It should also have responsibilities towards society in terms of environment, social responsibility and governance. It’s a framework that helps businesses measure their sustainable and ethical behaviour. ESG is often called sustainability and is a key part of how organisations operate efficiently. Firstly, ESG considers how a business impacts the natural world, including greenhouse gas emissions, energy efficiency and waste management. Secondly, it considers how a business treats its workforce and adheres to human rights. Finally, it looks at how a business is run, including its internal controls, board composition and executive compensation. ESG compliance is important and the logistics sector has to gear up for this ESG requirement.
Ports, shipping and ESG
Mr Rajiv Jalota, IAS, Chairman, Mumbai Port Authority, who was the Chief Guest on the occasion, spoke about Mumbai Port and how it is taking care of ESG as it’s a part of Mumbai city. In this regard, the port, in its 150th year, decided to institutionalise the mechanism of ESG via the creation of Mumbai Port Sustainability Foundation. The port has also initiated the setting up of a Centre of Excellence (CoE) for ESG and a circular economy under the newly incorporated Mumbai Port Sustainability Foundation. The Centre aims to implement the best practices for improving ESG ratings and aligning with circular economy principles to foster carbon neutrality and net zero in the shipping sector in India. India aims to increase the share of renewable energy to 60 per cent of the total power demand at each of its Major Ports, a significant rise from the present share of less than 10 per cent. This will be facilitated primarily by solar and wind-generated power. The CoE will not only cater to Major Ports but also serve as a platform to bring together the ports and shipping sector on key implementation measures to improve sustainability.
On shore power for ships, Mr Jalota said Mumbai Port is committed to providing it in 18-24 months for cruise ships berthing at the cruise terminals. The port is conducting a feasibility study, which is in its last leg, for providing shore power facility, he added.
He also pointed out that the International Maritime Organization (IMO) has adopted a strategy to reduce greenhouse gas (GHG) emissions from international shipping to net zero by 2050. This strategy aims to reduce carbon intensity by at least 40% by 2030 and achieve net-zero emissions by or around 2050. The strategy also includes a goal to increase the use of zero or near-zero emission technologies, fuels and energy sources to at least 5% of the energy used by international shipping by 2030. IMO net-zero framework will include a new global fuel standard and a new global pricing mechanism for maritime GHG emissions.
Mr Jalota highlighted the successful zero-emission trucking in Los Angeles in this regard. The Port of Los Angeles (POLA) is working towards a zero-emission truck fleet by 2035. The POLA’s Clean Truck Program and other initiatives include a Clean Truck Fund (CTF) with a rate of $10 per TEU for non-exempt trucks, which encourages the trucking industry to invest in cleaner vehicles. Zero-emission trucks are exempt from the rate.
He also spoke about alternate fuels, especially hydrogen, and how India is going to be a big producer of green hydrogen. Then came the topics of green corridor, marine biodiversity, mangrove conservation in Sewri and green finance as well.
ESG and sustainable logistics
Dr Rakesh Kumar, President, Society of Indoor Environment & Former Director, CSR & NEERI, gave a PPT presentation on the importance of ESG for a sustainable logistics industry. He said that the integration of ESG principles into logistics operations is no longer just about compliance; it is a strategic imperative. By embracing sustainability, logistics companies can differentiate themselves in a crowded market, win new business and contribute to a more sustainable future. The pressure is growing on logistics to deliver more sustainable shipping practices. That means environmental, social and governance (ESG) supply chain considerations are a must for any shipping strategy. The shift towards greener logistics is gathering pace and companies need to be ready.
Key regulations are mandating reductions in transport emissions, especially in major markets such as the United States and the European Union. Shipping companies need to follow three strategies to reduce gas emissions. First comes Decarbonisation, which involves reducing greenhouse gas emissions from logistics operations. Bearing in mind the CO2 footprint of shipping, decarbonisation strategies should be Step 1 for any logistics company.
Secondly, shipping companies should go for Energy Efficiency. Sustainable logistics relies on improving energy efficiency and optimising energy use to reduce shipping’s environmental impact while cutting costs. In recent years, the IMO has been implementing technical and operational measures to improve ship energy efficiency.
Thirdly, shipping companies should go for Reverse Logistics, which involves returning products from the customer back to the manufacturer for reuse, recycling, or disposal, supporting a circular economy and minimising waste. It should also go for Circular Economy Practices.
Impact of CBAM on logistics
Mr Anurag Sehgal, Managing Director, Price Waterhouse Coopers and Mr Preetish Biswal, Climate Change Advisory from Price Waterhouse Coopers, explained through a PPT presentation the impact of CBAM on Logistics. ESG needs to be internalised as an ethos. CBAM refers to Carbon Border Adjustment Mechanism, which is a fee or tariff on imported goods that accounts for the greenhouse gases emitted during production. The goal of a CBAM is to reduce greenhouse gas emissions and help the world reach net zero. The European Union (EU) has a CBAM that aims to ensure that the carbon price of imports is the same as the carbon price of domestic production, encourage cleaner production in non-EU countries, prevent carbon leakage, and complement the EU’s emissions trading system.
The European Union’s CBAM is expected to have a significant impact on the logistics sector, including increased costs as companies importing to the EU will need to account for the carbon content of their products, which could lead to increased costs. In supply chain changes, companies may need to change their sourcing and manufacturing strategies.
BRSR and ESG
Dr Meraj Inamdar, Senior Faculty, National Institute of Securities Markets, presented a slide show and tried to demystify BRSR and ESG. He explained that Business Responsibility and Sustainability Reporting (BRSR) is a reporting framework that requires Indian companies to disclose their ESG performance. The Securities and Exchange Board of India (SEBI) developed the BRSR to help investors and regulators better understand a company’s overall stability, growth and sustainability. BRSR improves ESG disclosures by providing more information on trends and breadth over past years. BRSR makes it easier to compare sustainability performance across sectors and time periods.
Mr R. D. Tripathi, CEO, MbPA Sustainability Foundation, gave a presentation on Mumbai Port Sustainability Foundation and talked about the Centre of Excellence at Mumbai Port. The Foundation, through its Centre of Excellence on ESG and circularity, aims to support local ports and maritime companies in the enhancement of their overall sustainability through the adoption of advanced technologies and eco-friendly practices.
Ms Sivaranjani Subramaniami, COO, Environment Managing Centre Pvt. Ltd, made a presentation explaining the need for decarbonisation in the port and maritime sector. She stressed that decarbonising the maritime sector and ports is a complex process that involves many stakeholders and technologies. The goal is to reduce greenhouse gas emissions and help limit global temperature rise to 1.5° C. Some potential solutions include using green fuels, like hydrogen-based fuels and biofuels, which is a key part of decarbonisation. Digital technology can help improve energy efficiency and connect people and organisations across the maritime sector. Electrification is one way to decarbonise the maritime sector. Renewable heat can be used to run industrial processes in ports. Circular production models can help decarbonise the maritime sector, she added.
Dr Neville Mehta, a former CEO with the Mumbai First initiative of the Government of Maharashtra, introduced the speakers at the meeting. The event concluded with a vote of thanks by Mr Vivek Kele and the felicitation of speakers by the AMTOI team.
Source: Exim News Service: Mumbai, Sept. 30