Tag: Supply Chain

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Maersk’s Move to Integrated Reporting: A Look Back, a Nod Forward

If someone had told me a few years ago that a global shipping giant would be one of the big pioneers of integrated ESG reporting, I would have been politely skeptical. And yet, here we are. Maersk has steadily shifted from typical financial statements (with a separate ESG document on the side) to a fully consolidated annual report that weaves sustainability throughout. So how did that transformation unfold, and what does it mean for an industry that often seems to measure success by bigger ships and faster transit times?

Why Does This Matter?

The idea behind an integrated report is that finance and sustainability aren’t two separate stories: they’re one. Maersk’s 2024 Annual Report is a noteworthy example of this approach—especially when many of its biggest peers, such as CMA CGM, MSC, COSCO, and Hapag-Lloyd, still issue standalone sustainability reviews alongside their main annual documents. It’s not that these competitors lack ESG ambition—several have robust decarbonization initiatives or advanced technologies in the pipeline—but Maersk is among the first in this sector to put financials and ESG under one roof, so to speak.

A Quick Timeline of Maersk’s Evolution

This has been a multi-year process for Maersk.

1. 2019–2021: Separate Reports, Early ESG Mentions

Maersk offered traditional annual statements for financial performance and separate sustainability PDFs covering environmental and social programs. Anyone wanting the full picture had to juggle two documents.

2. 2022: Major Growth Meets Climate Goals

A spike in freight rates gave Maersk capital to invest in logistics expansions—warehousing, e-fulfillment, and alternative fuels like methanol-powered vessels. Sustainability gained prominence, but it still lived mostly in its own report.

3. 2023: More Double Materiality, Still Some Separation

As the market normalized, Maersk sharpened its references to “double materiality” (both how climate impacts the business and how the business impacts society). However, the main annual report and the sustainability report remained distinct, though more cross-referenced than before.

4. 2024: A Fully Integrated Annual Report

With the European Corporate Sustainability Reporting Directive (CSRD) taking effect, Maersk moved to a single, integrated Annual Report that handles everything from core financial data to climate disclosures. While some material is “incorporated by reference,” readers can see, in one place, how financial outcomes tie in with decarbonization targets, workforce well-being, and governance structures.

Where Maersk Stands Out

It’s no secret that ocean shipping has a massive environmental footprint, so integrating sustainability metrics with standard balance-sheet talk isn’t just a nice add-on—it’s central to the entire strategy. Maersk’s current approach offers a clearer sense of how alternative fuels, new vessel technology, and operational changes influence the bottom line (and vice versa). Put differently, you can see how climate considerations drive budgeting decisions in real time, not as an afterthought.

Competitors like CMA CGM, MSC, COSCO, and Hapag-Lloyd—giants in their own right—are also making strides in greener operations. MSC is investing in biofuel trials; CMA CGM has been vocal about LNG; COSCO has discussed electrification in port operations; and Hapag-Lloyd references climate initiatives in annual updates. But as of now, the majority haven’t converged it all into one integrated publication. Maersk’s approach, therefore, feels a bit like they’re inviting stakeholders into a single auditorium rather than multiple breakout rooms.

Congratulations to Maersk

Achieving a fully integrated report isn’t as simple as stapling two PDFs together. It means revisiting how the organization measures success, training teams to track and interpret new types of data, and structuring corporate governance to recognize sustainability metrics on par with revenue or EBITDA. Maersk has managed to align with the CSRD while conveying its operational and strategic narratives in one cohesive format. That is no small feat, and it sets a benchmark others might follow.

Looking Ahead to 2025

So what’s next? Well, for starters, the value of integrated reporting doesn’t just lie in merging documents—it also hinges on depth and clarity. Below are a few suggestions for the next iteration:

  • Showcase the Materiality Process More Plainly

Readers appreciate seeing how Maersk selects, prioritizes, and validates its environmental and social topics. Laying out that process in plain language (and maybe a concise graphic) would make double materiality feel less abstract.

  • Fine-Tune the “Incorporation by Reference”

Hunting through references can get cumbersome. A strong index or crosswalk table that shows exactly where each ESRS (European Sustainability Reporting Standards) requirement is met can help everyone from investors to civil society groups find what they need.

  • Deepen the Risk & Scenario Analyses

Maersk has addressed issues like climate risks and geopolitically affected shipping routes. In 2025, a more granular, data-driven look at multiple future scenarios—and their potential financial repercussions—would be invaluable.

  • Balance Environmental and Social Issues

Climate stands out in shipping, but the “S” in ESG deserves equal prominence. Clearer data on labor practices, diversity, and community engagement around port facilities could lend further insight into Maersk’s social footprint.

  • Reinforce Links Between ESG Targets and Executive Compensation

Although the current report mentions sustainability targets in pay structures, greater transparency around how these metrics actually influence performance-based incentives would boost stakeholder trust.

Final Thoughts

Maersk’s 2024 integrated report marks a significant turning point—one that bridges financial realities with the company’s impact on our planet and people. As the shipping industry continues to evolve, compliance standards evolve to require integrated reporting, and competitors weigh how (and whether) to follow suit, this integrated approach likely will become the standard rather than the exception. The challenge, for Maersk and the industry alike, will be ensuring that future disclosures remain as thorough and user-friendly as possible—without losing sight of the operational complexities that make global trade possible in the first place.

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“Carbon-neutral” natural gas? Really?

Natural gas liquefaction plant

Can a container ship filled with liquified natural gas be “carbon neutral”? Shell Oil and Cheniere Energy want you to believe that. In May, the two companies delivered a shipment of gas to Europe in which emissions associated with the upstream costs of processing and liquifying the gas were offset by carbon credits purchased from Shell’s portfolio of nature-based projects. Emissions were offset to the “FOB delivery point”. This means that Shell and Cheniere have offset the emissions all the way to the point of delivery, as indicated by this statement in their joint press release.

The companies worked together to offset the full lifecycle greenhouse gas emissions associated with the LNG cargo by retiring nature-based offsets to account for the estimated carbon dioxide equivalent (CO2e) emissions produced through the entire value chain, from production through use by the final consumer (all scopes).

Shell Oil Press Release, May 5 2021

Really carbon-neutral?

What they’re claiming is that independent of how the customer uses the product they’ve delivered, the product itself has been produced in a carbon-neutral fashion. And, of course, their shipping partners are eager to tout their new green credentials too. Astomos Energy, for example, put out a press release stating that they are now purchasing “carbon-neutral LPG”. The appetite for Cheniere’s new products was strong enough that they posted a 40% increase in revenues from a year ago, and bumped guidance, rewarding investors with a 74% increase in the stock price from this time last year.

Naturally, this has commentators crying foul. Salon labelled it a greenwashing scam. Cleantechnica simply said A tanker full of fossil fuels isn’t carbon neutral. That’s not how it works.

I agree.

Decarbonizing supply chains is hard.

What this illustrates, quite neatly in fact, is the complexity of decarbonizing supply chains. At Davos this year, the WEF unveiled a report titled “Net-Zero Challenge: the supply chain opportunity“. The central thesis was that 8 supply chains accounted for over 50% of the world’s emissions, and that decarbonizing those supply chains would have impact. The energy industry wasn’t one of the eight supply chains named directly. Why not? Energy is an input into every supply chain. You literally cannot decarbonize supply chains without decarbonizing energy itself.

Let that sink in.

It’s good that Shell and Cheniere have taken the small step of offsetting the emissions associated with creating and shipping their polluting products, even if the marketing of those products as net-zero LPG is deceitful. The next step is to decarbonize energy generation itself — Shell and Cheniere’s customers.

Policy is part of the answer

So how do you decarbonize energy itself? Aside from technology solutions, policy is an incredibly important tool. Yesterday the UNEP Net-Zero Alliance, a group of investment managers representing $6.6 trillion of assets under management, released a position paper calling on governments to adopt common approaches on emissions pricing, to apply emissions pricing to every sector of economies (not just the heavy emitters), to swiftly phase out fossil fuel subsidies, and to fund research and create incentives to decarbonize hard-to-abate sectors. This approach — carrot and stick — works. You can see it visually by checking out the current price of European Usage Allocations futures (as at July 7). Emissions in Europe are now nearly $60/ton, up from $20 in April.

EUA December Contract prices, courtesy Ember

What’s next?

We’re still a long way from where we need to be. Analysts say that the price today needs to be closer to $85, rising to $145 by 2030, in order to reach a 1.5C global warming target. Emissions pricing schemes still only apply to 17% of the world’s carbon emissions. So long as emissions prices stay low, and customers exist that aren’t covered by pricing schemes, there will be a market for green-washed inputs like (unfortunately) fossil fuels.

As individuals, there are are two actions we can take.

  1. When emissions trading becomes a political issue in your country, vote in favor of emissions markets, or cap-and-trade solutions. There will always be those who claim that “the market” is the solution. The market is clearly not infallible, as the Shell / Cheniere announcement shows. Vote for emissions trading schemes with teeth, not un-regulated markets.
  2. When you have the option, buy green energy from your local supplier. Do your homework first, though. Make sure that you aren’t being sold green-washed fossil fuel energy, but rather energy from non-emitting sources like wind, solar, or nuclear.

And Shell, Cheniere… we know you have to serve your shareholders, but shame on you for such cynical marketing tactics. We deserve better.

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Recycled – June 28, 2021

Renewable Energy Boom newspaper headline
  • It was a scorcher here yesterday. Record temperatures, and set to achieve them again today. And for the record, these are not normal, or even normal variance. @weatherprof provides this insight:
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Scope. 1, 2, 3

Getting to a zero carbon footprint, globally, is a hard concept to wrap your mind around. The scale of what’s required is intimidating!

Today’s post is about a carbon accounting concept called emissions scope. Emissions scope helps businesses to account for where emissions occur in supply chains. Then they can focus on where improvements are possible. Businesses that want to perform carbon accounting use these concepts, but we as individuals can also use this them as a framework to think about decarbonizing our own lives.

Emissions Scope. Scope 1 emissions are associated with the operations of the business directly. Scope 2 emissions are from the energy used to run the business. Scope 3 are emissions upstream from business inputs and procured products, and downstream from the use of the products.
Emissions Scope

Definition

  • Scope 1 emissions are from the direct operation of the business, and the assets that the business owns or controls. Scope 1 emissions include the operation of facilities, manufacturing plants and more. They can also include emissions from fuel combustion used to run operations.
  • Scope 2 emissions are from energy purchased to run the business. Buying power or heat from a utility creates scope 2 emissions.
  • Scope 3 emissions come in two categories: upstream and downstream. Upstream emissions are from the inputs needed to run the business — the raw materials used to build products, the capital expenditures to buy equipment, and even the transport of those supplies to the business. Downstream emissions are created after the outputs of the business leave the business — the emissions from the transport of the products to market, the usage of the sold products, and even the disposal of those products.

Impact

When world leaders talk about getting to zero, they are talking about decarbonizing these supply chains. Commitments like the NDCs, and individual country level regulatory actions are fairly blunt tools. They create a framework for businesses to operate within, but ultimately businesses face the hard work of gathering scope level emission data, building governance and reporting into processes, and delivering sustainable products. It’s a daunting transformation. The good news is that these kinds of transformations appear to be achievable with very little impact on the final price for products that we consumers pay. According to World Economic Forum Net Zero Supply Chain analysis, many businesses can get to a net zero supply chain with an impact of between 1% and 4% on final consumer price.

As individuals, and families, we can also apply the same kind of thinking. Scope 2 emissions would be emissions from the energy we purchase to use in our day to day lives. Scope 3 emissions would be from the things we buy, and the things that we throw away. And if you heat or cook with wood, oil or natural gas, or run a creative business like woodworking from your home, these are the actions which are creating scope 1 emissions.

So what can we as individuals do? Here are two suggestions:

  1. We can assess our own carbon footprints. Our scope 1 emissions are likely to be small, because most of us don’t build products ourselves. But we all have scope 2 emissions. All of us consume energy at home. So what are the emissions associated with our own lives? How can we reduce them? Can we buy clean energy instead?
  2. We can make choices about scope 3 emissions in our lives. When we purchase products — cars, houses, computers, food — we can choose to look at the emissions content of the products we are buying. For example, buying locally grown food creates fewer emissions than buying fruits and vegetables out of season from distant countries, which then have to be transported to us. Choosing to bring reusable shopping bags to carry our purchases home reduces plastic waste, and hence emissions. Those are easy and obvious. But the next time you go to make a major purchase, look at the sustainability of the products you are buying, and the commitment of the company to sustainability. More companies are starting to publish reports like this one from Microsoft. More and more, business is responding to customers who “vote” at the cash register for a cleaner future.

Getting to Carbon Zero is a huge task for human society. We all have a role. Let’s not leave it to government, or to business alone. Let’s also reduce at home, and shift our purchasing dollars to companies that value sustainability.