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Cost Savings - Commercial Advantages - CSR Value

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Presented by Julian Speck at Offshore & Shipping CSR, London (Capital Link Forum), October 27, 2011 …

Presented by Julian Speck at Offshore & Shipping CSR, London (Capital Link Forum), October 27, 2011
Describes a fleet strategy focusing on quality vessels, emphasising energy efficiency and reduced environmental impact to enable asset owners to extract maximum value from CSR (Corporate Social Responsibility) programmes.

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  • 1. FutureShipJulian SpeckCapital Link CSR Forum, London, 27 October 2011Strategic CSR- Quality Ships, Cost Savings, Commercial Advantages, CSR Value
  • 2. Commercial advantages from Strategic CSR | 27.10.2011 | No. 2FutureShip Consulting – Four dedicated practices covering the entiremaritime value chain• Help clients taking the right strategic decisions• Services lines comprise fleet and portfolio strategy, businessperformance optimization, organization development andtransaction support• Help clients designing commercially and technically state of the artvessels, considering its life cycle cost and value• Fully independent position, free of commercial interest in shipdesign and construction itself• Dedicated pilot in maritime operations offering an integrated andindependent perspective on improvements• Effective tools and systems based on our deep technical expertiseand state-of-art engineering• Help clients to comply with all relevant regulations in the vessel/fleet specific most cost efficient way• Support positioning towards forthcoming societal and businessdemands and regulations a compliance strategyStrategyDesignOperationsComplianceSource: FutureShip
  • 3. Commercial advantages from Strategic CSR | 27.10.2011 | No. 3Community Support, Management Systems and the Environment, are theCSR dimensions that most companies care aboutSource: PWC Canada• CSR Reporting trends for 800 listed companies – six most important CSR report dimensions0% 50% 100%Health & SafetySupply ChainEmployeesCommunity SupportManagement SystemsEnvironment46% reportedon progressagainst goalsPercentage CSRreports thatpublish GHGemission targets*CanadaUSAEUR, JPN, AUSOther0% 50% 100%* A mixture of ‘absolute emissions’ targets and ‘emission intensity’ targets
  • 4. Commercial advantages from Strategic CSR | 27.10.2011 | No. 4Shipping companies name four reasons for addressing social issuesbut shipping companies do not explicitly mention CSR on their websitesSource: FutureShip, Press Clippings“We will make availablethe carbon dioxideemissions percontainer to clients”Shipping company executive“I believe that shippers will increasingly be drawnto those ships which attract lower costs for thesupply chain from lower emissions”Shipping association executive“Ignore the politics:carbon is now acommercialimperative”Shipping journalist“The world will expect the ship-pingindustry to give money to help mitigatethe damage ships cause or to invest innew answers for the future“Shipping consultant“Our reputation”“A license to operate”“Sustainability”“Moral obligation”*Ethics, Environment, HSQ, Corporate governance etcContainer (9)Drybulk (17)Tanker (15)(Avg.Mkt.Cap.US$million)Percentage of shipping websites inCapital Link Indices withmain menu links to social issues*0% 50% 100%($345mil)($245mil)($451mil)
  • 5. Commercial advantages from Strategic CSR | 27.10.2011 | No. 5CSR agenda needs to be company-specific, with increasing emphasis oncompetitive strategyDo not materiallyimpact ship owner’scompetitivenessSocial issuesaffected by company’sbusiness operationsSocial issues thatimpact the drivers oflong-term competitivenessCSR agenda: Responsive or reactiveCSR agenda: Strategic or proactiveIncreasing strategic importanceSource: FutureShip, Porter&KramerGeneral social Direct operational Strategic competitive1 2 3Examples: Lack of human rightsin developingcountriesEnvironmental impactfrom shippingoperationsEnergy efficiency ofexisting and futurefleet
  • 6. Commercial advantages from Strategic CSR | 27.10.2011 | No. 6Environmental improvements in operations driven by compliance withregulation and customer demandsVessel valuedriversStrategic• Emissions to air- CO2- SOx- NOx- PM- Ozone depleting substances• Emissions to water- Ballast water- Bilge water- Wastewater (sewage,shower/kitchen, holds)- Coatings/Anti fouling• Waste emissions- Cargo residues- Oil sludge• Noise emissions- Outside/inside• Ship recycling- Pollutants/IHMSignificant environmentaldimensionsMarketdemandAlready implementedTo be implemented ortightening expectedRegulation expectedRegulatorystatusSource: FutureShipOperational
  • 7. Commercial advantages from Strategic CSR | 27.10.2011 | No. 7Reducing bunker consumption reduces fuel costs and proportionallyreduces CO2 emissions with positive impact on environment• CO2 emissions can be directly translated into fuel consumption and thus bunker costs• Reducing fuel consumption improves operating profit and has a positive impact on GHG emissionsFuel consumption reduction opportunitiesSource: FutureShip
  • 8. Commercial advantages from Strategic CSR | 27.10.2011 | No. 8Strategic: Optimization of 9,000 TEU container ship yielded 17% fuelsavings with a smaller engine compared to yard’s initial designLpp: 288 mSpeed: 22,2 knInstalled Power: 54.180 kW39.000-17,5%Optimised47.300Not optimisedBase Line – Not Optimised Post Model – OptimisedSource: FutureShipBasic dataOptimization resultsTank test verificationPower requirement Annual fuel consumption (tons)Annual savingsUS$ 4.2million11 At bunker price of 500 USD/ton, current savings higherSaving from smallermain engine>US$ 2millionCO2 emissionscut by more than90 tonnes per day
  • 9. Commercial advantages from Strategic CSR | 27.10.2011 | No. 9Concluding remarks: Success in CSR involves strategic choices, whichneed to be viewed as long-term investments• General social: CSR is likely to be in the form of corporate philanthropy- Charitable giving may have limited benefit for the business of a ship owner/operator• Direct operational: CSR is likely to be compliance driven (regulation or from charterers/supply-chain)- Markets always ask for safer, greener, smarter vessels but everyone must comply with regulations• Strategic competitive: CSR for strategic advantage where investments benefit society and business- For example, energy efficiency, and increasingly long-term investments in optimum ship designsCurrent view of CSR for shipping:CSR must create shared value for business and societySource: FutureShip
  • 10. Commercial advantages from Strategic CSR | 27.10.2011 | No. 10Thank you for your kind attention!For questions please contactJulian SpeckUK Vice PresidentGL FutureShip GmbHEmail: jbs@gl-group.comMobile: +44(0)777-0964-989FutureShip

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