Investor Presentaiton
31
A.P. Moller-Maersk Annual Report 2020
Directors' Report Our business
Sustainability performance 2020
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To help society in the fight against the pandemic, the
capabilities and partnerships of A.P. Moller - Maersk,
including the Logistics Emergency Team, were
put to use to support communities, countries and
regions. The company also endorsed a World Eco-
nomic Forum charter in support of safe and sus-
tainable distribution of COVID-19 vaccines globally.
A.P. Moller-Maersk is heavily involved in develop-
ing a global plan for distribution of vaccines, with
planning for large-scale distribution beginning in
the summer of 2020, including the establishment
of a global logistics partnership with COVAXX to
distribute up to a billion doses of the COVAXX vac-
cine worldwide in 2021.
Safety differently
Integrating the updated approach to safety across
the company continued with positive examples
of progress and true mitigation of risks to human
health through new processes of collaboration
and deliberation.
In 2020, the safety organisation was reorganised
to reinforce that A.P. Moller-Maersk has one and
only one safety strategy, which is implemented
and enforced equally across the company. The
new central Safety and Resilience team creates
a strong pool of resources and tools, including
implementation support available at all levels
across the company. In this way, the integrated
company that A.P. Moller - Maersk is becoming is
being matched and mirrored, assuring custom-
ers that when they leave their supply chain obli-
gations in the hands of A.P. Moller - Maersk, the
capacity for safe operations is in place.
Deeply regrettable, one person lost his life while
performing tasks under A.P. Moller-Maersk
management, when a roofer working for a con-
tractor fell as scaffolding collapsed after being hit
by a crane that tipped. This tragic event reinforces
the company's commitment to working more
with suppliers on safety and sustainability issues.
Commitment to responsible
ship recycling
Four years after the first A.P. Moller - Maersk
vessel landed in a ship recycling yard in Alang,
India, an impact study clearly demonstrated very
significant improvements in safety, environ-
ment, workers' conditions and access to health
in the wider community. The ambition is to cre-
ate responsible ship recycling opportunities that
are also commercially viable for the ship owners
and changing the ship recycling industry at the
same time.
A.P. Moller-Maersk worked towards
three key priorities during the COVID-19
crisis: Protecting our people, supporting
our customers, and helping society to
get through the crisis.
The prospect of broad, sustained change is, how-
ever, challenged. No yards from the Alang area
- despite collaboration with the EU Commission
and investments over the past two years - have
yet been included in the EU List of yards outside
the OECD that can be legally used for recycling
of ships registered in EU countries. In addition, a
new legislative barrier has arisen, because legisla-
tion has come into force that prohibits exporting
of hazardous waste from a list of OECD countries
to developing (non-OECD) countries, which some,
including the EU Commission, are applying to ves-
sels for recycling. This has currently stalled the
Alang yard applications and now awaits an inter-
nationally negotiated resolution of this regulatory
challenge.
This situation is highly detrimental to the deve-
lopments in Alang, as well as to ship owners.
A.P. Moller-Maersk's position, based on thorough
legislative analysis, is that there are legal options
available to the EU, and the company is engaging
with a multitude of stakeholders to find both a
short and long-term solution to this gridlock.
A further challenge is that within the next few
years, even larger vessels than today will be near-
ing end of life and ready for recycling, but these
vessels will be too large for many of the yards
offering financially viable solutions.
Because the work in Alang documents that
responsible ship recycling is possible outside
yards in OECD countries, A.P. Moller-Maersk's
ambition for the work on ship recycling has
changed from radically changing the industry,
starting in Alang, to creating opportunities for
responsible ship recycling globally.
IMO 2020 conversion successful
From January 2020, the IMO's 0.5% global cap on
the content of sulphur in fuels came into effect.
The enforcement mechanism for this legislation is
a ban on carrying non-compliant fuels on vessels,
except for vessels where scrubbers are installed to
clean exhaust gasses.
The main concern in the years leading up to
the cap taking effect was uneven enforcement.
While the level of control is not as stringent as
A.P. Moller-Maersk would prefer, there is no indi-
cation that compliance is lacking. Oil market shares
are a useful proxy for this, and it appears that the
low-sulphur fuel uptake is at the expected level.
A.P. Moller - Maersk has installed open-loop
scrubbers on a share of the vessels as a risk man-
agement measure, as the price gap between heavy
fuel oil and low-sulphur fuel was expected to be
significant. The use of scrubbers remains a dis-
cussion point and no independent, global survey
of the effects of scrubbers has yet been produced
to support global legislation. Increasingly, legis-
lation is being implemented regionally, for exam-
ple in the EU and in some US states and Australia,
requiring vessels to shut off the scrubber system
when entering near-coastal waters and switch to
low-sulphur fuel.
The A.P. Moller - Maersk 2020 Sustainability
Report provides more information about the work
and progress on sustainability priorities. For an
overview of Environmental, Social and Governance
(ESG) performance data including Sustainability
Accounting Standards Board (SASB) and Task force
on Climate-Related Financial Disclosures (TCFD)
indices, please see the 2020 ESG data overview on
A.P. Moller Maersk's investor relations website.View entire presentation