Investor Presentaiton

30 A.P. Moller-Maersk Annual Report 2020 Directors' Report Our business Sustainability performance 2020 =1 Four primary fuels for net-zero shipping Fuel Biodiesel AI Methanol (bio-methanol and e-methanol) Lignin fuels A new biofuel based on biomass residue (lignin) and alcohols (methanol or ethanol) H Ammonia (green ammonia) N H Key advantages Can be used as drop-in fuel in existing vessels and engines Already in operation as marine fuel Engine is available Liquid at normal conditions, well-known handling Lignin fuel has the potential of being the most price- competitive carbon-neutral fuel with the lowest price estimates almost on par with fossil fuels Fully zero emissions fuel Can be produced at scale from renewable electricity alone Importantly, this product demonstrates that the commoditised freight market is open for price differentiation. Driven by the end-consumers' increased willingness to pay for sustainability, and growing climate urgency, this represents a solid contribution to the development of a business model for decarbonised logistics and transport. A multi-tier value proposition has been developed, as a way to respond to relevant customer needs aligned with their maturity and ambition level for carbon reductions, and building stronger ties and partnerships with the group of customers who also have ambitious decarbonisation strategies. Key limitations/risks Limited availability of biomass feedstock a challenge to scalability Price pressure due to high demand from competing industries Bio-methanol: Production at scale is challenged by uncertainty over availability of biomass E-methanol: Availability of biogenic CO₂ source at production site, cost and maturity of electrolyser technology In the development stage, production needs to be scaled up to create a new value chain and infrastructure for supply Engine requirements would be the same as for methanol, but additional handling of contaminants may be required Safety and toxicity challenges Infrastructure challenges at ports Future cost depends on cost of renewable electricity and cost/maturity of electro- lyser technology Technology: The future of fuels In the past two years extensive analyses of the available technology and fuel options for net- zero operations have been conducted. Based on this work, four primary pathways are being pur- sued, as seen in the table. In response to the increased urgency of deliv- ering on decarbonisation, A.P. Moller - Maersk's position is that the right thing to do is to leap- frog to pure net-zero vessel technology with- out any transitional technologies. Fuel transformation involves the entire supply chain, and part of the work consists of overcoming barriers to progress, including scaling fuel produc- tion and associated technology, lack of fuel infra- structure and safety related issues, while manag- ing the impact on company profitability. Policies: The need for broad-based action The final piece of the decarbonisation strategy relates to the policy frameworks established to further this process. Policies must not only secure that lowest performers are held accountable, but also that first movers are rewarded for the risks taken on behalf of the whole industry. With very few exceptions the political and thus leg- islative debate is currently not moving fast enough to fulfil its role. A.P. Moller - Maersk advocate for more ambitious targets in the International Mari- time Organization (IMO) and for lawmakers to build incentive structures that reward first movers and remove a share of the financial risk related to decar- bonisation. There is a risk that regulators are out of sync with the progress and development pushed by industry, which would be to no one's benefit. At regional level, there is no doubt that shipping will be part of the EU Emissions Trading System within a few years. However, this needs to be done with the objective of actually lowering shipping emissions and with a view to supporting an inter- national greenhouse gas (GHG) reduction agree- ment, while still supporting modal shift of cargo to sea, which will remain the most sustainable way of transporting large quantities of cargo. Frontline heroes stuck at sea Enabling global trade has been A.P. Moller-Maersk's finest task for decades. In extraordinary circumstances, due to the COVID-19 pandemic, A.P. Moller - Maersk employees across the world have gone to extraordinary lengths during 2020 to keep goods moving freely from the start of the pandemic. A.P. Moller - Maersk's executive leadership established that the company's focus during the COVID-19 crisis would be on three priorities: Pro- tecting our people, supporting our customers, and helping society get through the crisis. Everyone's safety was sought to be ensured by enabling employees to work from home wherever possible, providing personal protection equipment, and changing procedures to allow for adequate dis- infection of equipment in for example port termi- nals. The greatest challenge has been for seafarers. Normally, a crew member stays on a vessel from two to six months. The Maritime Labour Conven- tion states that crews can spend a maximum of 11 months on board. These norms were broken in 2020, as crew changes were made impossible by restric- tions on entry to countries and travel restrictions. At its highest point, more than 2,500 out of 6,000 colleagues could not be relieved of their duties. The challenge was brought to the highest levels at the UN and IMO as well as to legislators and NGOs, and agreements with governments, airlines, airport operators, hotels and port authorities were estab- lished to enable crews to have essential worker sta- tus and safely travel to and from major port hubs with major international airports, including spe- cial A.P. Moller-Maersk charter flights. Company quarantine safe centres were created in strate- gic locations as well as hubs for local quarantine in high volume areas. These measures helped seafar- ers reach their destination and by the end of the year overdue crew members were relieved.

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