Will COVID-19 prove to be the ESG-catalyst for the Shipping Industry?

Updated: Aug 3, 2020

2020 has been a surprise year, to say the least; whether for everyday life, for the world economies or for the shipping industry, any projections for the year have been completely overrun by the COVID-19 pandemic. Any other consideration in the shipping industry, such as tonnage supply and demand and IMO2020 implementation have taken a back seat.

COVID-19 has had tremendous impact on the broader maritime sector, with low demand, and accordingly lower freight rates, being the most predictable result. Other conspicuous impacts on the maritime sector has been a cruise line industry that has come to a standstill as cruiseships of all types and for all budgets have been moored as health regulators worldwide have come hard on them. And, hundreds of thousands of seafarers found themselves on no man’s land, literally, as shortsightedly many countries – even in countries with a strong maritime sector – are not allowing crew changes for ships in their waters leading to a human tragedy and exacerbate risks to the global supply chains.

2020 was supposed to be a year when ESG guidelines (Environment Social & Governance) were slowly and hesitantly to take a greater hold in the maritime industry. Implementation of IMO2020-lower-emissions mandated changes would have given a boost to cleaner fuels and more efficient engines. Also, in a favorable macro-economic environment, shipping companies were to be implementing social and governance changes and getting in line with regulatory changes, mostly widely mandated in the EU Zone.

However, instead of coping with its structural imbalances, the shipping industry (and the world) were caught fully consumed so far in 2020 (and rightly so) with reacting to the COVID-19 pandemic. At first sight, it would appear to be a great waste of resources (dealing with COVID-19) and potentially another excuse for ESG to be subordinated once again to a lower level of importance.

We dare suggest that COVID-19 may actually be a positive cause for change for the world and for the shipping industry as well. COVID-19, as a novel (unique and unprecedented) risk has been forcing humankind to question many beliefs and practices that were a “given”