The International Maritime Organization (IMO), as part of the United Nations (UN) family, has adopted the Sustainability Strategy and is actively working towards the 2030 target for a sustainable maritime industry. The IMO has made the World Maritime theme for 2020, “Sustainable shipping for a sustainable planet. “
Shipping plays a pivotal role in the global economy as 90% of world trade is carried by sea. We cannot consider a sustainable future without a sustainable maritime industry.
As a whole, supporting the maritime adventure is a wider maritime cluster in which every participant, from shipowners to marine insurers, has responsibility for its continuity.
All decisions made by UN bodies affect member states, but the IMO is the only organization that has a direct effect on the shipping industry through its guidelines and regulations.
We all embrace sustainability. However, the IMO should seek closer dialogue with the global shipping community, as regulations should be decided and implemented on a more realistic basis to protect the marine environment, contribute to the battle against climate change and establish a sustainable maritime industry.
How do the IMO’s regulations and guidelines affect the marine insurance industry?
Low Sulphur Cap Limit – IMO 2020
IMO 2020 is old news for the IMO’s sustainable planning, but uncharted waters for the marine insurance industry.
We have seen many claims arising out of the IMO 2020 related to scrubbers and non-compliant fuels.
Already two months since IMO 2020 came into force, we face a wide variety of problems in terms of delays in bunkering and cases of possible engine damages due to low quality of compliant fuel.
The marine insurance industry relies on Classification Societies. What happens if the vessel breaches its warranty due to non-compliance with Low Sulphur Fossil Oil fuels? Most probably, the shipowners, in their effort to comply, will be rendered uninsured.
Reduction of Green House Gas Emissions by 50% by 2050
The next big challenge for the shipping industry is halving GHG emissions by 2050.
Until now, we have no clear path as to how this will be achieved. LNG technology can make a significant contribution to the future energy system and play a key role in seaborne transportation, but still, this is not enough.
We may agree to introduce alternatives to fossil fuels, such as biofuels, biogas, and other renewables such as electricity, as well as cold-ironing.
As marine insurers, however, we cannot insure vessels using fuels that have not been tested. We do not insure certainties. Engine damages arising from non-tested fuels are risks that we cannot undertake.
Another question is: How responsible and sustainable shall we be if we choose to use biofuels that consume more energy to produce than the fossil fuels they will replace? Who are we to decide to sacrifice sustainable practices ashore in the cause of sustainability at sea?
A truly sustainable culture is based on a holistic approach spanning the environment, society, and economy.
We believe in a strategic Re-approach where all activities in the insurance value chain, including interactions with stakeholders, are carried out in a responsible and forward-looking way by identifying, assessing, managing, and monitoring risks and opportunities associated with environmental, social, and governance issues.
It is time for action
Building a sustainable maritime industry and a resilient future should not only be focused on implementing regulations developed by international or national organizations.
We need to embrace sustainability fully, and this will occur only if all stakeholders related to the maritime adventure – the Organizations and Regulators, the shipping industry, and the services related to the maritime industry such as the marine insurance community – all sit at the same table and enhance the dialogue that will lead to regulations, targets and best practices that can actually be implemented by the industry.
The coming decade is the decade of sustainability, and as a community, we should all do our utmost to confront the challenges involved successfully towards a sustainable maritime industry.