A.P. MØLLER - MÆRSK A/S. Sustainability Report PDF

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A.P. MØLLER - MÆRSK A/S Sustainability Report 2015 Contents Introduction Systemic issues Managing impacts Foreword by the CEO 01 Governing progress on sustainability 02 Determining our

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A.P. MØLLER - MÆRSK A/S Sustainability Report 2015 Contents Introduction Systemic issues Managing impacts Foreword by the CEO 01 Governing progress on sustainability 02 Determining our material issues 04 Our sustainability strategy 05 Systemic issues require leadership and collaboration 06 Enabling trade through projects and advocacy 08 Taking the lead on climate change 10 Tackling corruption 12 Exploring solutions for ship recycling 14 Global partnerships for change 16 Managing impacts of our businesses 18 Respecting human rights 20 Protecting our people 22 Reducing the risk of labour disputes 25 Building an inclusive mindset 26 Moving on tax transparency 27 Managing environmental risks and compliance 28 Strategic change in responsible procurement 30 Community engagement and investment Community engagement and investment 32 Skills and resources applied for the common good 34 Assurance and performance data Independent assurance report 36 Performance data 37 About the report The report covers activities in the calendar year Our approach to reporting is to focus on material issues and activities, in line with stakeholder concerns and relevance in terms of context, completeness and balance. We strive for optimal accuracy, timeliness, clarity and reliability in the way we communicate. It is possible to access the Group s Sustainability accounting principles and previous year s data on our website, where our Communication on Progress to the UN Global Compact is also available. Please go to This is the Maersk Group The Maersk Group is a worldwide conglomerate operating in 130 countries. In addition to owning one of the world s largest shipping companies, the Group is involved in a wide range of activities in ports, logistics, and the oil and gas industries. Group Facts Revenue USD bn 47.6bn (2014) Profit USD m 5.2bn (2014) 2015 Cash outflow distributed % by stakeholder group Suppliers 61 Shareholders (dividends) 15 Employees (salaries) 13 Public sector (taxes) 4 Repayments of borrowings 4 Investments (net) 3 The Maersk Group has five core businesses Our businesses connect and drive markets across the world, moving goods, fuelling growth and enabling economic development. Employees Employee engagement score Number of fatalities ,355 89,207 (2014) 76% % Target: Zero % % read more p Relative Group CO2 improvement Number of oil spills (above 10 m3) Reduction in facilitation payments* (2014 baseline) % read more p read more p % read more p * Covering the Group s shipping and logistics businesses. Maersk Line A leading global container shipping company Revenue USD 23.7bn Employees 32,750 19,044 Transported containers (1,000 TEUs) 42% Average CO2 reduction per container (2007 baseline) Maersk Oil An international oil and gas exploration and production company Revenue USD 5.6bn Employees 4, ,000 Barrels of oil equivalent per day (entitlement production) 0 Oil spills Our Values Constant Care Uprightness Humbleness Our Employees Our Name APM Terminals A global port operator Revenue USD 4.2bn Employees 21,171 Maersk Drilling A specialist in offshore drilling for oil in ultra-harsh and deepwater environments Revenue USD 2.5bn Employees 3, Terminals across the world and more than 140 inland services 22 Offshore drilling units across the world and 1 under construction 1.94 Lost time injury frequency 0.31 Lost time injury frequency MAERSK CONTAINER INDUSTRY APM Shipping Services A provider of shippingrelated services through four industry leading business units Revenue USD 5.1bn Employees 18,366 Maersk Container Industry A manufacturer of dry containers, refrigerated containers and refrigeration units Revenue USD 691m Employees 4, bn Invested capital 3 Production facilities across the world and 1 R&D centre 0.11 Maersk Supply Service LTIF 0.63 Damco LTIF 2.87 Lost time injury frequency 0.53 Svitzer LTIF 0.13 Maersk Tankers LTIF Besides the five core businesses, the Group has also strategic investments, which are also included in this report; amongst others Maersk Container Industry Introduction Foreword by the CEO investments in new vessels, retrofitting of older ones and enhanced planning. We do this as a matter of principle and because it makes business sense. Foreword by the CEO A continuous effort to reach zero The Maersk Group has two areas on which our target is to reach zero. These are the areas of work-related fatalities and major oil spills. We are not satisfied with our performance on either. In 2015, 7 people died while working for us. These fatal accidents occur in spite of our sustained prevention efforts through the work of our substantive and dedicated safety organisation. The fate of each of these people is deeply unsettling to me, and I want to assure all our employees families that we will continue to press forward to reach our ultimate target: to return all our people home safely at the end of the working day. This continues to be our highest sustainability priority. We had three larger oil spills in 2015, which were contained and cleaned up when they occurred. Our analysis shows that spills mainly occur when work processes are not followed. An increased focus on process safety, which may help in avoiding spills in the future, is in progress across the Group s businesses. To the Executive Board the responsibility is personal. It is our obligation to deliver our Company and our Name in better shape than when we stepped onto the bridge. The current business environment is harsh for the industries in which we operate. In spite of this, there should be no doubt that our commitment to sustainability in our businesses is unfaltering, as is our commitment to the United Nations Global Compact. While the Group is in good shape, we too need to adjust to the market outlook in order to stay competitive. On this basis, we have had to say goodbye to employees mainly in Maersk Oil, Maersk Supply Service, Maersk Drilling and Maersk Line. In line with our Group Core Values, we try to provide support through these transitions. Sustainability is business Sustainability is not a luxury. It is a responsibility and a precondition for long-term competitiveness. To the Executive Board the responsibility is personal. It is our obligation to deliver our Company and our Name in better shape than when we stepped onto the bridge. The high levels of trust and engagement shown by our employees are an essential element in reaching our goals. We welcome the global deal reached in Paris during COP21 which is an important step towards ensuring that global warming stabilises below 2 degrees Celcius. Future growth must occur while simultaneously containing climate change. We continue our decoupling of growth in traded volume and CO2 emissions in Maersk Line, our container shipping business, through Improvements in partnership A number of sustainability issues related to our industries require thought leadership and the creation of the knowledge, partnerships and collaboration necessary to induce real change. Today, the majority of ships are dismantled and recycled at facilities on beaches. Here, the standards and practices often do not adequately protect the people working at the facilities and the natural environment. We have decided to play a role in changing this situation. Alone and in partnership with others, we will work to upgrade conditions at recycling facilities on the beaches in the Alang area, India, while we remain committed to responsibly recycle our own ships and rigs. Opportunity for growth The coming year will be challenging for our businesses, but also one with ample opportunity for those who are prepared to seize the many opportunities presented. As a competitive Group with a highly engaged workforce and performing in volatile markets this is what we will do to unlock growth for the company and for society. Nils S. Andersen CEO of the A.P. Moller - Maersk Group Sustainability Report Introduction Governance Governing progress on sustainability Sustainability governance is needed to ensure high-level accountability and decision-making that will allow us to fulfil our ambitions, manage our risks and address the expectations of stakeholders. Our main governance and supervisory body is the Sustainability Council. It reports directly to the Executive Board and oversees progress on the Group s sustainability strategy. The Sustainability Council s functions are laid out in a charter: To oversee compliance with the Group s sustainability standards and policies in the Commit framework (see governance framework graphic below). To endorse sustainability strategies and positions and to keep track of the most prominent movements on sustainability across the Maersk Group To guide execution of approved strategies and positions To prioritise and approve projects related to the execution of the Sustainability Strategy within the investment framework provided by the Group s Executive Board Members of the Council The Sustainability Council has seven members representing key Group Functions and businesses. Their deep knowledge of our businesses make for insightful discussions, direction setting and decision-making. In 2015, the Sustainability Council members were: Claus V. Hemmingsen (Chairman and member of the Group Executive Board) and also CEO of Maersk Drilling, Carol McDiarmid, acting Head of Legal and CSR in Maersk Oil Morten H. Engelstoft, CEO of APM Shipping Services Kevin Furniss, VP of HSSE APM Terminals Søren Toft, COO of Maersk Line Steen Karstensen, Head of Group Procurement Annette Stube, Head of Group Sustainability The Sustainability Council is where the interests of business and sustainability are aligned across the Maersk Group for optimal outcomes. Claus V. Hemmingsen Chairman of the Sustainability Council Each of the Group s operating businesses have established governance structures to implement and manage sustainability. Management is held accountable for this through bi-annual reporting and CEO reviews (see next page). The Sustainability Council s 2015 actions An important item on the Council s agenda for 2015 was the development of a strategy and project on ship recycling (see p. 14). Other topics in 2015 included updates on the core Group sustainability programmes (Anti-Corruption, Responsible Procurement, Global Labour Relations and Diversity & Inclusion), approval of the Group s position on the global cap on sulphur oxide, discussion of sustainability criteria in M&As, approval of enabling trade projects and development of a global education pipeline model, the viability of which will be discussed and determined during A Group safety update is the first topic on the agenda at each of the Council s four annual meetings. Establishing oversight on progress To support the implementation of decisions and progress on sustainability ambitions, the Council is provided with a compliance and performance dashboard twice a year. Below: The Sustainability Council debates, sets direction and decides on future actions on our material sustainability issues. 02 Maersk Group Introduction Governance Council members discuss progress and performance during the Sustainability Council meeting on November 10, The dashboard provides an overview of performance on key indicators related to Group targets and progress on sustainability integration in the businesses. It also shows status on implementation of centrally driven programmes, including where relevant, compliance as determined by the Commit assurance process (see figure on right). Categories in the dashboard are: safety, CO2 emissions, oil spills, anti-corruption, responsible procurement, global labour relations, diversity and inclusion, and sustainability integration in the business units. Overseeing CEO Reviews Group Sustainability every year conducts reviews of the businesses progress and performance on sustainability. These are based on informed dialogue between business CEOs and sustainability staff and Group Sustainability. Each business is reviewed every second year. In 2015, reviews were performed in Maersk Oil, Svitzer, APM Terminals and Maersk Line. Results of the reviews are reported to the Sustainability Council and to the Executive Board. Sustainability governance framework 2015 Commit framework * Group governance framework: Group Core Values, Group Policies and Group Rules Group Functions Own and drive the Commit Group Rules Executive Board Sustainability Council ** Approves and oversees positions, projects and strategies Group Sustainability Overall management of sustainability Develop, implement and monitor strategies, positions and projects Business Units Develop governance processes and structures to integrate sustainability Manage sustainability risks and commercial relationships Implement programmes to comply with the standards and policies in the Commit framework * Compliance with Commit items is the subject of an annual assurance process. ** HR Board approves and oversees Global Labour Relations and Diversity and Inclusion programmes. Sustainability Report Introduction Materiality Determining our material issues Knowing what our most material issues are helps us focus our reporting on what is important to our business and our stakeholders. Assessing materiality The materiality of issues to the Maersk Group is assessed through a process that considers issues that pose a risk to our business, and/or that affect our stakeholders due to the impact of our activities. The result is a list of issues which is then assessed in terms of importance to our business and our stakeholders. We integrate input from stakeholders by leveraging contributions from issue owners and businesses, who regularly engage with stakeholders relevant to their area of work. In September 2015, a materiality calibration workshop was conducted in which this year s assessments were discussed with issue owners. The conclusions from this workshop were compared to materiality assessments conducted by the business units to ensure alignment. The subject of personal safety is fundamental to our values and policies and will always be our top priority. As such, we do not assess this issue alongside other issues as part of the materiality assessment process. Informing our reporting The materiality matrix shows the relative importance of the issues assessed on their impact on cost, revenue, compliance and reputation, and correlating this with the estimated level of importance to employees, customers, regulators, the media, investors, local communities and NGOs. The matrix informs our reporting as we mainly report on issues in the top right quadrant, but also include issues or obligations linked to our commitment to the UN Global Compact and regulation. Diversity and inclusion was assessed as growing in importance due to increased risk of legal liabilities in some jurisdictions and a better understanding of the issue s effect on Group opportunities, reputation and brand. Strong safety measures, avoidance of major oil spills, and ensuring responsible business practices, including anti-corruption and aspects of human rights, remain the issues which are of highest concern to both business and stakeholders. Maersk Group materiality matrix 2015 Importance to our stakeholders Local content Chemical transportation and storage Diversity and inclusion Arctic activities Ecosystems and biodiversity Recycling Natural resources scarcity of ships Waste management Decommissioning of platforms Water use/ management Lobbying Corruption Labour relations and labour standards CO2 emissions SOx Tax practices Supplier conduct Energy consumption NOx Ballast water Extreme risk countries and conflict zones Personal safety Major oil spills Process safety Changes from 2014 to 2015 Recycling of ships grew in importance to our business and stakeholders, which is reflected in both actions and reporting by the Group on this subject. Importance to A.P. Moller - Maersk 04 Maersk Group Introduction Strategy overview Our sustainability strategy The ambition of our sustainability strategy is to enable growth through trade and education while limiting transport s impact on climate change. Our sustainability strategy focuses on three areas of opportunity where we can accelerate the positive impacts of our business: enabling trade, climate change, and education. In 2015, we reduced CO2 emissions, progressing toward our Group target and decoupling growth in volume from CO2-emissions. We also participated actively in partnerships and high-level advisory groups on carbon emissions in transportation. In the area of enabling trade, we continued our work in three pilot projects and enhanced our advocacy of the WTO trade facilitation agreement. We mapped and evaluated current investments in education and developed a model for upgrading the skill levels of a country, the viability of which will be determined during The strategy also stipulates that we will continue to integrate sustainability in our operations, mitigate risks and improve performance levels. Our progress is described throughout the chapters in this report. Unlocking growth Change in drivers of progress Two years into the strategy period we are making adjustments to the sustainability strategy as a result of learnings achieved and changing framework conditions. While we originally designed the evolution of and target setting for the three themes (enabling trade, climate change, and education) to follow the same format, this approach is now less relevant. Whereas the key drivers for the enabling trade work are growth and innovation, climate change is driven by cost reduction and for education the original driver has changed along with the business climate in the energy sector. Consequently, we will have different approaches to the three themes going forward and are changing our approach to scaling up the projects from model to solution integrated in our businesses. Welcoming the sustainable development goals In September of 2015 the United Nations general assembly, representing 193 countries, approved 17 new and global sustainable development goals. The private sector is expected to play a critical part in achieving these goals, and the goals have the potential to serve as a guiding light for companies searching for the right way to release their businesses potential to deliver on sustainability. For the Maersk Group, the goals and expectations are clearly aligned with our sustainability strategy s focus on unlocking growth and the partnerships in which we are already engaged. Climate change Decoupling growth Trade Economic development Education Jobs and development MAERSK LINE Why we do it By raising the bar on energy efficiency, we can respond to a global challenge, supporting the need to decouple economic growth from CO2 emissions while lowering our cost. See page Access to global markets can help generate economic development and employment supporting businesses and people through new opportunities for exports and income. See page 8. Education and employment provide opportunities for people and communities to develop and prosper while supporting relationship building for the Group in select markets. See page 34. Sustainability Report Systemic issues 06 Maersk Group Systemic issues Systemic issues require leadership and collaboration Acknowledge, commit, act, lead, and collaborate. Five key concepts in tackling issues where our own actions will be insufficient to mitigate the risks to our business objectives or to maximise synergies between business growth and creation of societal value. For some sustainability issues, change at a systemic level is the only way to effectively address and solve the issue. In order for this to occur many actors will have to move in the same direction at the same time. In addition to their systemic nature, they pose material risks to the individual businesses objectives and they are issues that stakeholders believe are at least in part our responsibility. To simultane
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