“Between the Devil and the Deep Blue Sea” – Summary of a master’s thesis on CSR and the shipping industry
By Frankie Haugh - Project Coordinator
In a world driven by global trade, shipping plays a significant role in driving economic interconnectedness. Given shipping’s role in the climate emergency (a contribution of 2.5% of greenhouse gases globally), there is a pressing need to reevaluate the way in which we fuel the industry. In my thesis, I focused on the critical question: can Corporate Social Responsibility (CSR) truly steer shipping towards eco-friendly technology?
Shipping has an irreplaceable position in global trade, underpinning our consumption-driven culture. Despite its carbon footprint, alternative transport modes fail to match its efficiency and scale, making shipping an essential cog in the global economic wheel.
The industry has a complex structure and conditions that are unfavourable for technological development. Narrow profit margins mean a huge degree of price competition, which leaves little room for the ‘luxury’ of CSR ventures, especially given the inherent risks with R&D.
Through a series of interviews with stakeholders across the shipping market, I discovered a desire to move shipping in the right direction and an aspiration to improve shipping’s environmental stewardship, but this sentiment is at loggerheads with the structural reality of the market.
The pivotal question is whether CSR can alone be a strong enough cause to drive the industry into taking up environmentally friendly technology. I concluded that it was not.
CSR initiatives are increasingly becoming part of conversations in the shipping industry, but this is not enough to overcome the structural barriers faced by individuals in the market. This is echoed by existing literature.
Legislation can have an impact as it enforces change on the whole market. Just look at the effects of the IMO regulation on sulphur levels in fuel, where change was forced through regulation, which brought a 70% reduction in sulphur oxide emissions from shipping.
Cargo owners also have a role to play. Often large organisations with significant market power and deep CSR requirements within their corporate philosophy.
Transitioning the fragmented and complex shipping industry to green fuel is far from simple, but regulation and cargo owners can be driving forces for change.
Most significantly, however, is the economic case for change. In the years since this paper, Smart Green Shipping (SGS) has invested significant resources into the research and development of wind-based environmentally friendly technologies, namely the FastRig. This has led to a land-based demonstrator at Hunterston Parc, which will be followed by a ship-based demonstrator in 2024.
In bearing the risk and financial burden of R&D, SGS is making environmentally friendly technology not only viable but advantageous to the shipping market through significant savings on fuel costs. Further, by creating a plug-and-play removal solution, we remove another layer of risk for ship owners.
The market structure is a significant blocker to the uptake of environmentally friendly technology, and CSR isn’t a strong enough driver to overcome this. However, FastRig will allow shipping companies to harness the significant economic and environmental opportunities from wind technologies without bearing the financial risk.