Credible Benchmarking

Work Stream

With the help of the Southampton Solent University

Contents

Overview and process

Background

Search and compare rating schemes

How to use rating schemes

What’s next and resources

Appendix 1 – How rating schemes create change

Appendix 2 – Case studies

Our challenge was to find ways of helping the

shipping industry and its customers to navigate

the growing number of beyond-compliance rating

schemes; to encourage wider adoption of rating

schemes and to improve sustainability

performance in the shipping industry.

Our aim is to provide and improve the transparency and

comparability that enables cargo owners, charterers and

ship owners to integrate sustainability considerations into

commercial decisions, and move towards a more sustainable

shipping industry.

The challenge

Summary of the work

stream

Over the last year we have:

• Developed a web-based tool, to help cargo owners and charterers to select the rating schemes that most closely meet their needs

• Produced guidance on how to use ratings schemes for best effect

• Compiled a series of case studies that illustrate how rating schemes are already being used to inform business decisions

• Imagined what the best rating schemes will look like in the future and the positive impacts they could have on the industry

Background

What the research told us

Research by Southampton Solent University identified five barriers to uptake of sustainable rating schemes:

• Low demand from shipping industry customers, due to lack of awareness and understanding of how to use of rating schemes

• Perception of cost and lack of clarity over business benefits to industry

• No critical mass in the market

• Lack of standardisation in outputs and metrics e.g. CO2, SOx and NOx

• Lack of alignment between different parts of the shipping industry

What’s important about rating schemes

We want to encourage and facilitate greater transparency of

environmental performance in shipping and promoting the

use of rating schemes supports this because:

• Benchmarking leads to better informed business

decisions and helps establish higher baselines

• Greater uptake and engagement by the shipping industry

and their customers, will lead to the ongoing

development and improvement of rating schemes

• Their effectiveness is currently limited by a number of

factors including awareness and understanding

How rating schemes improve business

Sustainability rating schemes are an important means of both declaring and demanding information about a ship’s sustainability performance.

Credible benchmarking enables customers to make informed decisions based on the performance of shipping lines and vessels.

The primary incentive to join or participate in a rating scheme is to gain a commercial advantage, for example:

• Meet CSR requirements - particularly cargo owners

• Gain economic incentives – e.g. reduced port fees

• Better terms with banks and insurers

How rating schemes create change

The experience of other industries demonstrates how mass uptake of rating schemes is an effective way of creating change towards sustainability.

• LEED and BREEAM have continued to push sustainable building performance standards beyond the regulatory minimums for 20 years

• The Marine Stewardship Council (MSC) has recognised and rewarded sustainable fishing practices as well as raising awareness with consumers

• The Forestry Stewardship Council (FSC) promotes the responsible management of the world’s forests

See Appendix 1 for more details

Search and compare rating schemes

The search and compare tool

The web-based tool we have developed simply helps cargo

owners, charterers and ship owners to compare and select

from the rating schemes currently available to them on the

basis of objective criteria.

Vessel Type

Many schemes cover more

than one vessel type, while

others specialise in rating just

specific vessel types.

Benchmarking scope

The scope of schemes varies.

Those included so far, rate:

• CO2

• NOx

• SOx

• Particulate matter (PM)

• Water and waste

• Chemical use

Transparency and

verification

Some schemes require data to

be verified by a 3rd party. Other

schemes are themselves

independently verified. Many

publish their methodology and

some also make results

available.

Geography

Many of the schemes are

global, some are only available

for regional operators and

others are locally specific.

Performance

Some ratings are based

primarily on the performance of

a ship during operation.

Others use the design

characteristics of a vessel to

predict performance.

Metrics and Outputs

There is a variety of rating methodology and scoring to choose from:

• Step ratings where ship or service performance is banded

• Absolute data e.g.CO2 per tonne/km

• Scoring framework based on a weighted averages

• Straight forward pass or fail

How to use rating schemes

Identifying schemes and how to use them

As there is no single rating scheme that is perfect for

everyone, each scheme represents a balance between

accuracy and simplicity of assessment, as well as

applicability to different sectors. To help users make

informed decisions we have developed:

• Some detailed guidance notes for cargo owners and

charterers when using and interpreting a rating scheme

• A series of case studies to illustrate how to get the most

from rating schemes

Understanding rating schemes

Link to Guidance for Users

Our guidance notes have been developed to help identify

the key issues when choosing a rating scheme and use the

Search and Compare tool to select the right rating scheme

for individual needs.

Making the most from rating schemes

More in Appendix 2 and in detailed case studies.

What’s next?

What next…

• We are exploring how to extend the uptake of rating

schemes and drive continuous improvement in standards

across the shipping industry

• We hope our independent guidance will contribute to an

increase in the uptake of rating schemes and demand for

transparency from logistics managers and charterers

• We recognise the need for leadership in this area; many

of the SSI members already use rating schemes and are

keen for others to adopt them

Future developments

As rating schemes develop and uptake increases we would like to see:

• External alignment to make comparison possible by aligning metrics, weighting and data format

• Credible metrics based on evidence that is relevant for shipping companies and cargo owners, and better still globally agreed

• Transparent weighting criteria is essential if impacts are to be convincingly valued and compared

• Proper use of performance data will ensure users reward best performance

• Reliable governance by reputable rating schemes will involve all relevant stakeholders

Remaining challenges and barriers

In the short term:

• SSI members need to sign up to and use rating schemes themselves

• The SSI has a role to play in promoting rating schemes in principle and the online tool specifically

• All rating schemes could benefit from greater collaboration and alignment

• There is still a lack of demand and awareness of rating schemes among the key audiences – namely the charter market and shipping customers/cargo owners

• We would like to see the sustainability of ships, routes, and/or fleets incorporated into procurement decisions made by logistics managers, charterers and shipping agents

Resources

Link to Search and Compare rating schemes tool

Guidance for users

Getting the most from rating schemes

Appendix 1 - How rating schemes create change

Appendix 2 - Case studies

Appendix 1 - How rating schemes

create change

Rating buildings

BREEAM and LEED are both primarily used to assess the

design of new buildings and provide an easy to understand

sustainability rating.

These two global schemes are the market leaders for

sustainability benchmarking in the built environment.

• LEED originated in the US in 1993

• BREEAM originated in the UK in 1990

Both are voluntary schemes and have been highly

successful at pushing building performance beyond

regulatory minimum levels.

Rating buildings

Twenty years since their inception

• There are over 250,000 BREEAM and LEED rated buildings worldwide

• And more than 1m more planned

How do they work

• Assess building designs based on factors including energy, water use, waste etc.

• Results are combined to give a ‘weighted average’ score for the building – Pass, Good, Very Good and Excellent for BREEAM, and Bronze, Silver, Gold and Platinum for LEED

Lessons learned - being “Good Enough”

Similar to many of the ship rating schemes available today, BREEAM used the tools and metrics available to them when it launched in 1990. Some of these - including the energy calculations – were controversial, causing some concern to architects and engineers who considered their buildings were not being assessed accurately. However, for the Planning Authorities, building purchasers and occupants who wanted to know about sustainability of their buildings, the level of accuracy was considered sufficient for them to start demanding BREEAM assessed buildings, thereby driving uptake of the scheme by the industry, and forcing even reluctant developers and designers to engage with the scheme.

Lessons learned – allowing for

improvement over time

Increased industry uptake of BREEAM provided the

credibility and finance for BREEAM to continue to engage

with the industry, and progressively improve metrics and

methods over time.

Had BREEAM waited until ideal metrics were in place prior

to launch, it is arguable that the scheme would have failed

to achieve the market penetration gained by meeting

market demand with a scheme that was ‘good enough’

rather than perfect.

Lessons learned – engaging the market

Initial demand for BREEAM was driven by Planning

Authorities who wanted a simple way of ensuring that new

buildings met a minimum standard of sustainability – and

UK Government clients, who mandated that all Government

occupied buildings would be required to achieve BREEAM

Very Good (now Excellent). This enabled demand for

BREEAM to reach beyond the ‘environment conscious’

developer, by providing the commercial incentive of access

to lucrative government contracts

Appendix 2 Case studies

Maersk and CCWG

Challenge / business need Solution

Adoption of rating scheme driven

by customers demands.

Maersk a member of the

CCWG since 2003

Uses of CCGW Benefits

Internal and external

benchmarking

Enabling customers to make

well informed decisions

Adoption of the environmental

standards defined by the CCWG.

Improvements in environmental

performance

Communication of environmental

performance to customers and

other stakeholders

Customer dialog and

collaboration

Thank you

With the help of the Southampton Solent University

Prepared by Polly Simpson

ssi@forumforthefuture.org

www.ssi.2040.org