WHAT IS THE ISSUE?
The vast majority of ship owners do not take responsible decisions when getting rid of their old ships. Instead, they sell their vessel to scrap dealers known as cash buyers. These companies, such as GMS, Wirana and Best Oasis, offer ship owners the highest price – in cash – for end-of-life vessels. They will manage the ship on its last voyage, as well as rename and reflag it, often to the worst performing flags in the world as part of their business model. Registering also the ships under anonymous post box companies, it becomes challenging for authorities to hold cash buyers accountable for their illicit business practices. Ship owners, on the other hand, will claim that their responsibility ended once the deal was concluded with the cash buyer.
Ship owners’ evident lack of due diligence when selling to cash buyers is, however, starting to concern not only law enforcers, but also the clients and the financers of shipping. Companies are increasingly asked to make sure that their business, including their supply chain, does not breach international human rights standards and does not cause harm to the environment.
Faced with this demand – and often with a much more public profile than most ship owners – banks, pension funds and consumer brands, upon which international shipping depends, are taking steps to require responsible ship recycling.
DENOUNCING GREENWASHING AND EXPLORING MARKET-BASED INCENTIVES
The Platform has continued to name and shame companies that do not have responsible practices at end-oflife and was invited in 2017 to share its findings and opinions at a number of industry conferences and meetings.
We have continued to explore market-based financial incentives and have focused our efforts on introducing a market-based program to change company behaviour to a wide range of stakeholders, collecting and processing valuable feedback. Companies have so far been very receptive to the positive reinforcement approach, juxtaposed by the Platform’s other campaign work. We also extended our outreach to other NGO’s, associations, and environmental programs to explore strategic partnership opportunities with those that are already well established in the marketplace. By denouncing the double standard and green-washing of dirty and dangerous shipbreaking practices that would never be allowed in the major ship owning countries, the Platform has been able to counter the arguments of the shipping industry and cash buyers that wish to exploit workers and the environment for the sake of higher profits. The proliferation of the misleading Statements of Compliance with the Hong Kong Convention has in that context been raised as a serious concern.
PROMPTED ENGAGEMENT FROM FINANCIERS
We have continued our discussions with the clients of shipping as well as the financial sector, and were successful in prompting a closed roundtable discussion between the Dutch banks ING, ABN AMRO and NIBC and progressive Scandinavian investors, including pension fund KLP, and major shipping banks DNB and Nordea. The banks now work jointly to promote responsible ship recycling and negotiate clauses to that aim in the loan agreements they sign with shipping companies.
KLP and Norges Bank, which manages the world’s largest sovereign wealth fund, have divested from four shipping companies, including container-liner
Evergreen, that have sold ships to the beaching yards. The financial institutions rely on the Platform’s data to screen the companies/holdings that they invest in or provide loans to, and use the information we provide on conditions at the yards in South Asia.
FOCUS ON HUMAN RIGHTS DUE DILIGENCE
In discussion with lawyers, NGOs and United Nations representatives, the Platform has contributed to the ongoing debate on Business and Human Rights. Compensations claims put forward, and investor divestments have clearly identified the responsibility of shipping companies to ensure the safe and clean recycling of their assets, and the Platform has raised with ship owners the necessity of exercising due diligence when choosing business partners linked to their operations, including at end-of-life. By engaging with ship recycling facilities directly and promoting best practice, the Platform also informs the shipping industry of clean and safe options available.
Source: steel guru. 24 August 2018