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Regulations as an opportunity in disguise for shipowners

19.08.22

The shipping industry and emissions-cutting may seem, at first sight, enemies. But as
what’s true for enemies to lovers and despite the important changes required from
asset owners and stakeholders to deal with the net-zero challenge, decarbonisation
could actually turn out to be a great opportunity for businesses to gain a competitive
advantage.

A shift in mindset is needed: by becoming a nascent market, carbon could
become the way for ship owners – naturally adaptable and flexible – to become the
lead for this transition.

The key to doing that is heterogeneity, as in the capacity of owners of creating assets
providing different kinds of revenue, for example through increased efficency
generating carbon credits. This calls for an approach in layers to go beyond the
“compliance shock”.

Also, it is important to keep in mind how carbon economics will need dynamic and
efficient vessel operations linked to emissions accounting able to generate value. To
do so, regulations and institutions such as ETS, EEXI and CII should be seen in a
different light. Shipowners are recently becoming more and more interested in
including carbon credits and offset trading into their decarbonisation strategies,
especially in light of the nearby future. The ongoing debate is focusing on whether the
shipping industry can actually benefit from regulations as well as on the necessity of
ensuring a business plan to assess the sustainability of the company. In this sense, to
effectively reduce and remove carbon emissions, it will be fundamental to put an ESG
strategy at its very core.

The best first step forward to elaborate a good ESG should be to benchmark: first of
all, to identify where investments are more needed, and consequently how to deal with
the resulting data points. In this way, it will be possible to understand the level of
diversification of knowledge and skills of the employees to address the carbon
challenge and generate innovative solutions.

Once understood the changes required and the starting point, the ESG strategy could
turn out to be helpful to identify ways to generate value through already existing
processes. Going beyond the mere requirements and standards, this approach can
asses and improve businesses’ long-term sustainability.

Shifting views and perspectives means abandoning old-fashioned views of costs and
losses, and rather starting seeing regulations as an opportunity to create a thriving
business well inserted into the new carbon economy.