2020/2021 | SUSTAINABILITY REPORT - TOGETHER, WE ENABLE SUSTAINABLE MARITIME DEVELOPMENT - GARD
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2020/2021 | SUSTAINABILITY REPORT TOGETHER, WE ENABLE SUSTAINABLE MARITIME DEVELOPMENT
CONTENTS
Sustainability is not
just ‘something done
by someone else’, it Introduction from the CEO 3
is done by each and Highlights from 2020/2021 5
every one of us. Five goals for our sustainable business 6
Focusing on people for sustainable growth 7
Rolf Thore Roppestad
Chief Executive Officer Supporting the maritime industry to limit the impacts of climate change 16
Preventing and minimising the impact of marine pollution 21
Pushing towards higher business ethics throughout global operations 24
Driving sustainable maritime development within our industry and beyond 30
Materiality and stakeholder dialogue 34
Governance for sustainable business 37
About this report 38
GRI Index 39
Appendix A: The ten principles of the United Nations Global Compact 47
Appendix B: The Principles for Sustainable Ocean Business 48
Appendix C: UN Global Compact Self-Assessment 2020 49
Appendix D: Principles for Sustainable Insurance 50
Appendix E: Membership of associations 51
CLICK HERE TO READ OUR Appendix F: Material topics and their stakeholder groups 52
DIRECTORS' REPORT AND
FINANCIAL STATEMENTS 2
INTRODUCTION FROM THE CEO
The global pandemic has created exceptionally difficult The health measures implemented across different
circumstances for every part of society, but the impact counties have created significant challenges for the
has been uneven with some parts of the global economy international supply chain. At any given time, over
and groups of people hit disproportionately. During 50,000 ships with some 1.2 million seafarers are on the
this challenging period, Gard’s key priority has been to move, and around 200,000 seafarers would normally be
look after our Members, clients, business partners and in transit for crew changes around the world. With closed
employees. I am proud that, despite profoundly changed borders and quarantine regulations, such crew changes
working conditions, we have managed to respond to have become very difficult. Seafarers have remained on
this global emergency by maintaining first class services board for long periods which for many has been bad for
and ensuring every day that we support the maritime both their physical and mental health. Gard has been
Rolf Thore Roppestad industries and protect society at large. an active part of the global campaign to find practical
Chief Executive Officer solutions to this challenging issue.
The pandemic storm cannot drive us off course in
striving to enable sustainable maritime development. The range of topics covered in this report illustrates that
This report will highlight some of the progress we have we have progressed with the integration of sustainability
INTRODUCTION FROM THE CEO
made in our sustainability journey. Guided by our core in our core business activities. Through risk prevention,
values, our commitments to international standards and risk reduction and risk sharing we help protect the
guidelines, and the expectations of key stakeholders, we lives and livelihoods of seafarers and make the oceans
have continued to address challenges and opportunities cleaner and safer. Striving for sustainability is a shared
across our operations and value chains. This year our responsibility for everyone in Gard. When claims for
focus on protecting the lives and livelihoods of seafarers injured seafarers are paid in a fair and timely fashion, we
and promoting their wellbeing has been of particular contribute to a world in which everyone has access to
importance given how profoundly they have been hit by decent work and economic growth. When pollution is
the pandemic. cleaned up from seas and shores through methods that
3
are effective yet friendly to the environment, we I hope that this report demonstrates our
help to conserve the oceans and sustain life under commitment and you will be inspired to engage
water. We aim to get all our business functions to with us in our mission: “Together, we enable
contribute to the continuous development of the sustainable maritime development”.
Gard group’s sustainable business action plan.
Rolf Thore Roppestad
It is not just about what we do today, but also our Chief Executive Officer
ability to apply foresight. Pandemics had been
forecast, but businesses and the society at large
were not sufficiently prepared. Gard included.
Climate change remains high on the global
agenda, but the consensus is that the world is not
moving fast enough to slow its development. We
need to prepare for what the future may bring.
This may encompass a range of scenarios, but
what will always be paramount is the emerging
needs of our Members, clients, employees, supply
INTRODUCTION FROM THE CEO
chain and other business partners, as well as the
expectations of society at large.
By enhancing our focus on sustainable business
operations, we are future-proofing our business
while creating long term value for all our
stakeholders. As a leading marine insurance
group, we have an important responsibility, as well
as an opportunity, to influence the transition to a
more sustainable maritime industry.
4
HIGHLIGHTS FROM 2020/2021
p.9
During MLC cases our staff go the extra mile to
ensure proper supply of bunkers and provisions and
p.22 help the crew manage their health and personal
In the early morning hours of 23 March 2020, the laden bulk carrier, KAAMI grounded requirements. Read our story on the “Eide Trader”.
in bad weather between the islands of Skye and Lewis off Scotland. Read about how
we approach sustainable ship recycling.
HIGHLIGHTS FROM 2020 / 2021
p.31 p.17 p.32
This year we became a signatory Offshore wind constituted 17.1 per cent Gard has participated in the UNGC Covid-19
to the United Nations Environment of total premium earned in the Energy Task Force that led to the publication of a set of
Programme Principles for Sustainable segment in the financial year ending recommendations to assist port states around the
Insurance (PSI). February 2021 and continues increasing. world to recognise seafarers as “key workers”.
5
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
Gard is a signatory to the ten principles of the
FOCUS ON PEOPLE SUPPORT THE MARITIME
United Nations Global Compact (Appendix FOR SUSTAINABLE INDUSTRY TO LIMIT THE
A), The Principles for Sustainable Ocean GROWTH IMPACT OF CLIMATE CHANGE
Business (Appendix B) and the Principles for
Sustainable Insurance (Appendix D). We are also
committed to the Agenda 2030 for Sustainable
Development.
We use the UN Sustainable Development TOGETHER,
WE ENABLE
Goals (SDGs) as our framework for defining our
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
SUSTAINABLE
ambitions and targets. Having assessed the MARITIME
DEVELOPMENT
SDGs, the opportunities and responsibilities
each of them represent to our business, and our
ability to influence through our own resources, DRIVE SUSTAINABLE PREVENT AND
competence and experience, we have prioritised MARITIME MINIMISE THE
five SDGs illustrated on the right. DEVELOPMENT IMPACT OF
WITHIN OUR SECTOR MARINE
These focus areas are reviewed on a regular AND BEYOND POLLUTION
basis and will be adjusted if the expectations
of our stakeholders change and/or where our
business can have an impact.
PUSHING TOWARDS
HIGHER BUSINESS ETHICS
THROUGHOUT GLOBAL
OPERATIONS
6
FOCUSING ON PEOPLE FOR
SUSTAINABLE GROWTH
As a global operation, Gard is aware that in suffered from life threatening conditions, meant Crew claims
jurisdictions with limited regulations or lack that securing timely medical treatments for
of enforcement, poor working conditions seafarers has been very problematic. Claims Death Illness Injury
Average number of claims per vessel per year
exist. This can negatively impact occupational handlers have had to make additional efforts
health and safety, harm the health of local to be able to secure medical assistance and
communities, and cause environmental increased time has been spent on handling
damage. We aim to respect and protect human medical emergencies. During 2020 the
and labour rights and work for a safe and number of crew illness claims reported to Gard 0.2
secure working environment in our entire value increased by 50 percent compared to 2019.
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
chain to ensure sustainable economic growth. This meant that Gard was able to support
and assist more than 2,000 seafarers who fell
HELPING MEMBERS AND CLIENTS sick. Almost half of the cases were related to
0.1
Covid-19.
People claims is the most frequently occurring
type of maritime insurance claim. Examples Over the longer term, we believe that a
include sick or injured crew members, proactive focus on seafarer safety and well-
passengers, stowaways and others injured in a being will pay off. The number of crew 0.0
maritime accident, e.g victims of ship collisions, claims has decreased steadily since 2017 as
20 Feb 20 Feb 20 Feb 20 Feb 20 Feb 20 Feb 20 Feb
2015 2016 2017 2018 2019 2020 2021
stevedores hurt during cargo operations or a percentage of the total number of entered
refugees saved at sea. The global pandemic ships with Gard.
has shone a spotlight particularly on the health
challenges faced by seafarers. The inability of
crews to leave their vessels, even when they
7
A recent example of Gard supporting Members Gard undertakes a direct financial responsibility
and their crew was our sponsorship of the toward abandoned seafarers for all ships
development of a simple online tool to help the entered for owner’s P&I risks. Our obligations
ships’ officers assess and treat crew on board and contact details are stated on posters
Frequency of people claims
with symptoms of Covid-19. Other initiatives to placed conspicuously on board those ships.
enhance crew welfare focus on:
Abandonment cases are challenging. Unlike
• The contractual situation regarding crew those where a Member is seeking our 0.50
Average people claims per vessel
benefits when an incident occurs. assistance with an incident, in MLC cases it is
the abandoned seafarers who turn to us on a
• Enhanced competence around mental direct basis. When doing so, they are usually in 0.47
illness.
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
dire need of support and help. In such cases,
we use our local networks to ensure that they
• Closer dialogue with organisations
get the necessary supply of provisions on 0.44 0.43
supporting crew and authorities so that
board, are repatriated as soon as possible and
when an unprecedented or new situation
compensated up to four months of unpaid
occur, we get quicker and better access to 0.41
wages. In some cases, Gard takes full control
important resources to solve the situation.
of the incident while in others we work with the
In addition to cover for traditional P&I liability, owner to find viable solutions for the crew. 2016 2017 2018 2019 2020
Gard provides financial security for certain
obligations shipowners have under the
Maritime Labour Convention, 2006 (MLC), in
the event crew wages are left unpaid and the
crew abandoned on board without appropriate
supplies.
8
The number of cases of abandoned seafarers The MLC serves to reduce the risk of seafarers
is growing, and in some cases they have been being abandoned without help for long
left on the ships for months or even years with periods but is no guarantee that it may never
no support. In the case of the “Eide Trader”, happen. As always, prevention is better than
the original crew of 14 was abandoned during cure. The problem should be fixed at source
2020 by their employer at the Sharjah Port in rather than just dealing with the consequences
the United Arab Emirates. In October 2020, and we are addressing the issue together with
Gard was able to repatriate nine of them but the International Group of P&I Clubs.
the harbour master would not allow the vessel
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
Such a case is stressful for everyone involved.
to be left unmanned so the last five, including
Our staff went the extra mile to ensure proper
the master, were forced to stay on board.
CASE STUDY: supply of bunkers and provisions, and also
SUPPORTING In the case of the “Eide Trader”, Gard played helped the crew managing their health and
its part in influencing the local authorities to other personal requirements, such as pocket
SEAFARERS IN CASE OF let the five remaining crew members go home. money for essentials, treats at Christmas or
ABANDONMENT We worked closely with seafarer unions, regular calls with the ships' captain to keep in
consulates, agents and other stakeholders to touch. The key is care, contact and empathy -
co-ordinate efforts and activities. Finally, on often outside normal working hours.
back to 11 February 2021 they were able to go home
highlights
after having been abandoned for about one
year.
9
Prevention as well as cure During 2020/2021 we have produced targeted articles, advice, and
newsletters - 64 of which relate to our chosen SDGs.
Our core purpose includes identifying and
managing risks arising from ship operations
- preventing accidents - as well as handling
the casualties that do occur - mitigating the
consequences of accidents. ALERT CASE STUDY INSIGHT POSTER ALERT
In Gard, we handle about 12,000 P&I and some
2,500 Hull & Machinery claims every year. From Prevent and reduce
these cases there are lessons to be learnt and, pollution, protect marine life 3 2
by sharing these with our Members and clients,
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
we can help raise awareness and consequently
prevent accidents from happening in the future.
Potential consequences from
collision and grounding 4 1 1
Health and safety
of people 16 10 16
Safety of ship
and cargo 6 4 1
10We are increasingly using social media to widen the reach of our case studies and articles in order to
share knowledge and expertise as broadly as possible.
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
FREQUENTLY ASKED MANAGING COVID-19 CASUALTY RESPONSE AND
QUESTIONS - MANAGING CASES ONBOARD2 SUSTAINABLE SOLUTIONS
ASIAN GYPSY MOTH RISKS1 AMIDST A PANDEMIC3
2,641 2,891 9,534
Impressions Impressions Impressions
1. https://www.gard.no/web/topics/article/20735032/asian-gypsy-moth
2. https://www.gard.no/web/updates/content/29346632/managing-covid-19-cases-onboard
3. https://www.gard.no/web/updates/content/30159042/casualty-response-and-sustainable-solutions-amidst-a-pandemic
11The connection between the technical OUR INTERNAL PROGRESS • Enhanced IT support: Prompt procurement
condition of a vessel and the probability of a of home office IT equipment to enable
Impact of Covid-19
claim is unquestionable. When compared with employees to connect to all the necessary
the world fleet, the average age of vessels As noted in the Introduction to this report, office systems and information resources,
insured with Gard is considerably lower than our operations have been profoundly affected allowing them to work from home efficiently.
the world fleet average: approximately 14 by Covid-19. The main goal has been to
years versus approximately 25 years. • Frequent communication to employees
ensure the safety and well-being of our staff,
about Covid-19 risks and available best
both when working from the office and from
The promotion of quality class societies, practice to share prevention/mitigation
home. Fortunately, we have had no Covid-19
such as IACS members, and quality flags on measures.
infections originating from the workplace
insured vessels has a positive effect on rate
among our employees. • Task force for remote working focusing on
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
of incidents. It is our ambition to continuously
monitor these developments and decrease the maintaining strong connections between
For our global operations, as from March
percentage of vessels that fly blacklisted flags employees across our global offices.
2020, more than half of the working days have
and/or have non-IACS class in our portfolio. been performed by employees working from • Increased focus on individual and
home. This new way of working has challenged organisational wellbeing and resilience.
Relative tonnage of vessels
employees’ work-life balance, especially
with non IACS class
those who have had to combine domestic • Employee survey on remote working
care of children, spouses, or other relatives challenges followed by sharing of best
0.3%
% of with their work. Robust measures have been practices for remote leadership.
tonnage
with non 0.2% implemented in our offices to minimise the risk
IACS class
of any virus outbreak. Our main priority has • Review and updates to business continuity
0.1% been to support our employees to the best of plans for all functions with focus on the
our ability, both for their safety and well-being, measures to take in case of an outbreak
0%
as well as to avoid operational disruption affecting our operations.
20 Feb 20 Feb 20 Feb 20 Feb 20 Feb 20 Feb affecting our customer service capabilities. Our
2011 2013 2015 2017 2019 2021
efforts have included: 12Responsible employer In 2021, we intend to add complementary In February 2021, we reported the status and
information on local legal requirements for each progress for our employees in the Norwegian
All employees have been paid their full salary of our offices to these handbooks. offices on the SHE Index for the first time.
throughout the pandemic, including those Gard AS ranked 85 out of the 92 companies
not able to go into work or work from home Continued focus on organisational that reported, primarily as a result of our
because of the nature of their role. There have resilience and well-being comparatively low proportion of females
been no layoffs and no material disruption of in senior management and among leaders
the operations or services to our Members and At the time of reporting the Covid-19 pandemic
reporting to senior management, as well as on
clients. persists. Vaccination programmes have started
the Board of Directors2.
in most countries but with big differences in
The leaders of each of our 13 offices located in the speed and reach. Hence, we continue our Gender balance in senior management
Europe, Asia and North and South America are efforts to safeguard our employees. In January
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
constitutes almost 60 per cent of the SHE
responsible for ensuring compliance with up-to- 2021, we launched a three-step programme Index, where 52 per cent comes from CEO,
date local health and safety regulations. for increased resilience and wellbeing for all Top Management plus direct reports to Top
employees; resilience being the ability to Management and about 6 per cent from the
In 2020, we changed our digital handbooks for recuperate after challenges. Board of Directors. Gard aims to achieve a
leaders, employees and on Health, Safety and
better gender balance at all levels. Our targets
Environment (HSE). Equality, diversity, and inclusion (EDI) in this regard for the end of 2022 and 2025
The change included introducing a Chatbot, In February 2021, we approved our new EDI respectively are stated in the table on the next
(HR Henry), which is an automated, digital policy, setting out our global aspirations for page.
advisory service available 24/7 to help leaders equality, diversity, and inclusion in Gard. We
and employees to get instant answers to HR also carried out an employee survey in the
and leadership related queries covered by the first quarter of 2021 to get a good baseline for
handbooks. working with EDI goals and measures going
forward.
2 In this context, the Board of Directors is for Gard AS being the employer of staff for the Norwegian offices.
13We are committed to equal pay for work of • The effect of differences in maternity Female employment in Gard AS (%)
equal value considering seniority, scope of and paternity leave periods on pay 19/20 20/21 2022 2025
Result Result Target Target
responsibility and individual performance when development: The company guarantees a
assessing the value of work. To ensure that we certain salary increase also for employees who Senior Vice President 20 22 30 40
live up to this principle, we aim to compare have been on maternity and paternity leave Vice President and 19 23 30 40
the extent of equal pay for female and male for more than 5 months of the year. Going Managing Directors
employees for different categories, analyse the forward, we will analyse in more detail how Senior Manager 50 44 50 50
results and consider measures to close gaps. this affects equal pay. 69 72 50 50
Team Leader
The table on the right shows that females are • The effect of part-time employees: Going Senior Professionals NA 43 50 50
paid less than males in all positions apart from forward, we will also analyse and account
Professionals NA 60 50 50
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
support professionals, and the discrepancy for the possible impact of variations in the
appears to be larger for positions at the Senior number of part-time employees between the Support Professional NA 87 80 70
Vice President and Vice President levels. The two genders.
following factors may influence the figures: Equal pay comparison (%)
For current employees who have had one or
Senior Vice President 73
• Possible skewed average figures: Averages more promotions, the promotion has taken on
Vice President and
may be affected by outliers, especially for average 6.7 years for women and 6.5 years for Managing Directors
88
categories with fewer employees. We will also men (figures for our global organisation). Senior Manager N/A
consider median figures in the future.
Team Leader 92
• Differences in longevity of service at a Senior Professionals 93
given level: Employees recently promoted
to a new and higher level will, pending Professionals 84
performance-based adjustments in their new Support Professional 102
roles, usually receive somewhat lower pay Average salary for women measured as a
percentage of average pay for men
than their peers having worked for longer at
the same level. Female *N/A due to group size
14Responsible investors Our framework for responsible investing
At Gard we recognise that the generation of long-
Gard will consider company specific
term sustainable investment returns is dependent exclusion as a means to increase the overall
on stable, functioning, and well-governed social, effectiveness of the framework.
COMPANY
environmental, and economic systems. To support EXCLUSION
this, we aim to fully integrate a framework for Gard will consider industry exclusion as a
means to increase the overall effectiveness
responsible investments into the strategic decision- INDUSTRY of the framework
EXCLUSION
making processes of our investment portfolio. We
are reviewing potential core principles for Gard’s All equity or corporate credit mandates on our own
approach, setting the direction for our role as a platform should apply an appropriate ESG
ESG framework for the investment process. Gard will
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
socially responsible investor in the context of making FRAMEWORK monitor the effectiveness of the applied framework.
a positive and meaningful contribution to society over
We aspire to have all our fund managers as
time. signatories to UN PRI (Princlples for Responsible
UN PRINCIPLES FOR Investments). Being a signatory is an important
The journey of integrating a framework for sustainable RESPONSIBLE INVESTMENTS selection criteria for selecting new managers, and
we actively encourage existing managers who are
investments started with the analysis of existing not signed up to become signatories.
Environmental Social and Governance (ESG) policies
applied by fund managers in the Gard portfolio.
During the last year, fund managers have been Our milestones
challenged to demonstrate their approach to these
policies in their investment processes. The review of
the ESG policies is expected to be completed during 1 2 3
2021. UN PRI are a selection criteria for external
managers when allocating money. We still aim to have 90 per cent of total assets under 100 per cent of total assets Gard is invested in a global impact portfolio that
management are managed by under management have an consists of 3 per cent of total assets under
all our fund managers as signatories to UN PRI by fund managers that are ESG framework for the management, focusing on equity investments that are
2022. signatories to the UN PRI. investment process. aligned with the ambitions set out in the UN
Sustainable Development Goals.
15SUPPORTING THE MARITIME INDUSTRY TO LIMIT
THE IMPACTS OF CLIMATE CHANGE
Climate change is increasingly affecting changing operations and needs by developing Gard is involved in writing P&I insurance and/or
communities around the world, from extreme products and services that enable them to thrive Hull & Machinery cover for several vessels and
weather patterns to coastal erosion, ocean in the transition to a more sustainable maritime rigs powered by alternative fuels. For example,
warming and acidification. Climate change poses sector. vessels powered by liquefied natural gas, LNG,
serious social and economic challenges for local carbon-free ammonia, plug-in hybrid (cruise)
and global business communities and climate- Gard is committed to gaining an early ships and hybrid powered drilling rigs.
related risks are likely to affect business models. understanding of the risks and ensuring that
Carbon-intensive industries, such as shipping Members and clients are supported when new
and energy, are particularly exposed to transition technologies are utilised. Understanding the
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
risks. Climate change presents opportunities for trends and assessing the implications from our
companies able to adapt business models to a current and future portfolio is an integral part of
lower-carbon future. Our focus is to support our Gard’s work and agile development approach.
Members and clients in managing this transition The value of this way of thinking and working
and realising the business opportunities of a low- has led to our developing in new areas such as
emissions society. autonomous and electric ships, offshore wind,
and offshore fish farms.
HOW WE HELP MEMBERS AND Premiums from these new segments are
CLIENTS increasing rapidly and the growth is expected
The shipping industry finds itself navigating to continue in the coming years. Offshore wind
challenging waters. As well as the pandemic, constituted 5.9 per cent of total premium earned
issues such as innovative technologies, cyber in the Energy segment in the financial year
security, alternative fuels, decarbonisation and ending in February 2020, one year later this had
new regulations are driving transformation. At increased to 17.1 per cent.
Gard, we respond to our Members and clients’ 16Gard has taken a proactive approach to To support this development, Gard has joined
understand the risks and opportunities the Centre for Research-based Innovation
associated with lower emission shipping. We (SFI) AutoShip, whose main objective is to
are involved in numerous projects and pilot leverage the skills of the Norwegian maritime
projects for new fuel technologies and zero cluster and create a center of excellence
emission shipping, in addition to bringing new around autonomous shipping. This project is
technologies into the portfolio. taking a leading role in the development of
autonomous ships for safe and sustainable
Since 2016, autonomous ships have received
operations, driving the decarbonisation of the
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
significant attention in the maritime industry
maritime industries.
globally. The motivations are an expected
CASE STUDY: reduction in costs of maritime and offshore To incentivise the shift to sustainable business
SUPPORTING NEW operations, and improved safety depending models in our industry, it is imperative
on whether autonomous systems can manage that the positive social and environmental
TECHNOLOGIES hazardous situations more effectively than impact is illustrated, while preserving and
manned operations. Autonomous shipping even enhancing value creation. SFI aims to
could transform waterborne transport to demonstrate to the shipping industry that
back to become significantly more energy effective as this transformation and innovation is indeed
highlights
autonomous ships have more space for green possible.
energy solutions.
17OUR INTERNAL PROGRESS There is a risk of higher claims exposures It is expected that these policies, and uptake
resulting from increased polar shipping activity of alternative technologies, will lead to the fuel
For climate-related risks, Gard is using the risk
enabled by much reduced levels of sea ice. A configurations of the world fleet being more
categorisation proposed by the framework of
casualty in December 2018 at Svalbard clearly fragmented in the future. This could affect
the Task Force on Climate-related Financial
illustrated the challenges associated with claims related to machinery failures and create a
Disclosures (TCFD).
response operations in remote areas and hostile need for different skills sets in the Gard group.
Gard’s financial position is mainly exposed weather and ice conditions. Gard has created Gard is currently taking part in several projects
through claims payments for damage to physical a working group to assess climate-related risks related to alternative fuels in shipping to better
assets as a result of increasingly extreme and the broader business implications that could understand the technologies and the associated
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
weather, for example oil rigs in the Gulf of arise from this development. long-term risks and opportunities.
Mexico or cruise ships in Florida – both located
There are significant changes expected in Gard could face reputational damage related
in areas frequently affected by hurricanes.
the legal and reporting requirements around to increasing climate concerns. This includes
Following 28 named storms in the 2005 fuel usage. The IMO has proposed emission being associated with Members and clients
hurricane season, Gard reduced its risk exposure reduction targets for 2050, and its greenhouse in industries with emission levels considered
in those regions as the aggregation risk was gasses strategy aims to reduce the carbon unacceptable by certain stakeholders and
considered too high. The 2020 North Atlantic intensity of international shipping by 40 per operating in sectors lagging the ambitions
hurricane season was characterised by an cent by 2030. In addition, draft amendments to of stakeholders. Externally, Gard has taken a
extremely high level of activity. There were 30 the MARPOL Convention have been presented. proactive approach to climate-related concerns
named storms, including 19 hurricanes. Gard In Europe, the EU plans to extend its emission which could make the group vulnerable if
followed the situation closely since many cruise trading scheme to shipping. stakeholders believe the actions taken are
ships were idle or in hot layup in the region and inconsistent with the messages conveyed
operating with a reduced crew. No significant publicly.
claims have been reported following the
hurricane activity.
18It is possible that our investment portfolio could Gap analysis the shipping sector.
face climate-related financial risks as repricing
of certain assets could cause considerable This year we started mapping our insurance Minimising our environmental footprint
shifts in the financial markets. However, the products to assess how our risk solutions
support the SDGs. Product mapping increases Gard’s impact on climate and the environment
majority of Gard’s investment portfolio consists
sustainability-related risk awareness and allows is primarily connected to energy consumption,
of government bonds and the equity portion
us to identify gaps where new insurance business travel and waste from our offices.
is increasingly focussed on environmental,
solutions may be needed to respond to future In order to support our aim to reduce GHG
social and governance factors. Investments in
risks our Members and clients may face. It will emissions, we measure our progress yearly.
companies particularly exposed to transition
risks, e.g., fossil fuel extraction and production, be extended to review our services against The Greenhouse Gas Protocol (GGP) is the
constitute a very small percentage of the total the SDGs in 2021, seeing how they contribute global standard for calculating this. The GGP
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
investment portfolio. Significant declines in to our Members and clients in mitigating uses a distinction of three different emission
equity markets are already reflected in the sustainability-related risks. levels: Scope 1, 2 and 3. Scope 1 covers direct
market risk calculations conducted to assess emissions from owned or controlled sources.
In an increasingly inter-connected world, risks
risks and meet regulatory requirements. Scope 2 covers indirect emissions from the
are truly global. In addition to known global
risks such as climate change or technological generation of purchased electricity, steam,
Liability risks associated with climate change
disruption, Gard monitors situations that heating and cooling consumed. Scope 3
are currently considered negligible for Gard.
have the potential to emerge as risks that can includes other indirect emissions that occur in a
Climate-related risks related to reinsurance and
significantly impact the business operations of company's value chain. We measure part of our
third-party liabilities have also been considered.
our Members and clients, and therefore Gard. Scope 3 by reporting our emissions resulting
Reinsurers could for example be vulnerable
Focusing on risks that have not yet materialised from business travel and waste.
if their portfolios are exposed to property or
infrastructure in regions exposed to the impacts allows us to detect and assess the potential This year our emissions, and especially those
of acute physical climate risks. However, the impact early, enabling us to be better prepared. within Scope 3, have significantly decreased due
reinsurance portfolio is diversified amongst well- In the past year, topics such as human right to the global pandemic, and many employees
rated reinsurers. violations and geopolitical tensions have seen have been fully or partly working from home. In
considerable escalation, with a direct impact on line with last year a further reduction of paper
19use has been achieved through continuous mitigating climate change.
electronic filing of documents and the electronic
processing of all Gard’s publications.
Emission overview
Scope 1 Scope 2 Scope 3
2019 36 155 2043
2020 20 134 415
Measured by tCo2e
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
Our global operations are now climate neutral
as we offset residual emissions through Verified
Carbon Units. As in 2019, we have purchased
credits in the Thor Heyerdahl Climate Park
mangrove re-forestation project for our 2020
emissions. This project is part of the UNFCCC’s
mechanism to combat global warming, which
guarantees the reduction of greenhouse gas
emissions and supports sustainable growth
in developing countries. The destruction of
mangrove forests in tropical coastal areas is an
ecological disaster for the people who live there
and the ecosystems. Planting new mangrove
forests binds CO2 from the atmosphere through
photosynthesis and thereby contributes to 20PREVENTING AND MINIMISING THE IMPACT OF
MARINE POLLUTION
It is estimated that 90 per cent of the world’s at a very early stage. During 2020 we expanded has supervised the removal and recycling of
trade is transported by sea. 50 per cent of the list of high-risk ports and only one major five wrecks, all in compliance with the Hong
the global merchant fleet measured by gross liquefaction case was reported to Gard during Kong Convention or the EU Ship Recycling
tonnage has one or more insurances with Gard. that year. Regulation, whichever was applicable for each
Through risk prevention and efficient, fair and specific case.
responsible handling of marine casualties and The Gard Outreach Programme was initiated
pollution incidents, we help make the oceans in 2013 to establish relationships between
cleaner and safer. Gard and coastal authorities around the world
to exchange information to enable efficient
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
HOW WE HELP MEMBERS AND handling of casualties. Despite challenges
CLIENTS related to physical meetings during a
pandemic, Gard Outreach has been operative
Data and digitalisation are critical components through our offices as they have engaged with
for risk assessment and loss prevention. salvage and pollution response authorities
Translating data and expertise into insights for in their respective markets. These efforts will
underwriting, claims and loss prevention allow remain of key importance also in the future.
us to offer specific guidance and advice on how
to reduce the risks to Members and clients. Since last year, Gard has been a signatory to
the Ship Recycling Transparency Initiative,
Our work with ‘geofencing’ is a good a cross sectoral coalition calling for more
illustration. Using Automatic Identification transparency around ship recycling. We have
System (AIS) data, and local knowledge recommended to our Members that they
about high-risk ports means we can identify comply with the Hong Kong Convention
liquefaction risk for nickel and iron ore cargoes when recycling ships. In the past year, Gard
21In the early morning hours of 23 March 2020, term solutions for disposal of waste may
the laden bulk carrier, KAAMI grounded in be counter-productive, more expensive,
bad weather between the islands of Skye and and hazardous for future generations.
Lewis off Scotland. The vessel was grounded In compliance with EU waste recycling
on an exposed rock pinnacle and subjected to regulations, Gard obtained quotes from
strong currents and a 16-foot tidal range. facilities in Europe for a complete vessel
recycling. However, the vessel was not in a
Removing a grounded vessel can be
condition for long-distance towing which
accomplished by different methods. The
presented an increased risk of environmental
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
KAAMI was a relatively small vessel and
impact.
refloating was determined to be the safest
CASE STUDY: and most cost-efficient method. After the Kishorn Port & Dry Dock was at the time not
RESPONSIBLE fuel and cargo were removed, the hold was on the list of EU-approved ship recycling
patched from the inside and salvors used facilities but its location and the fact that
WRECK-REMOVAL compressed air to gain enough buoyancy to it had same capability as the EU approved
allow the vessel to float off the rocks, thereby facilities made it the best option. Recycling
avoiding a more complex wreck removal the KAAMI was the first project the dry
back to operation had the vessel sunk in a navigation dock had undertaken in many years and has
highlights
channel. She was then towed to Kishorn Dry been referred to in the local press as the
Dock, a natural local facility, for dismantling. “awakening of a sleeping giant”. Shipbreaking
began on 18 May and was concluded on 30
There is now a recognition that short
June.
22OUR INTERNAL PROGRESS
We report on claims with an exposure in excess
of USD 1 million and since 2020 these reports
include any relevant sustainability considerations
for the case. In 2021, Environmental, Social and
Governance (ESG) reports will be introduced
for claims which do not fall into the category of
claims handled under the Crisis Management
Plan. The reports will outline the ESG issues
that were relevant for the claim in question and
how they were dealt with. The reports will take a
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
holistic approach in looking at the environmental
outcome of the casualty and can be used for
further evaluation and decision making.
In 2020 we launched a project to integrate
sustainability as part of the operation of Gard’s
Claims team, establishing 27 targets which the
team is committed to implementing. 20 senior
claims handlers and leaders took part in working
groups to identify these goals. The goals are
now being implemented and new working
groups have been established on the topics of
seafarers’ wellbeing, carbon foot printing, ESG at
repair and scrapyards, reporting and operational
excellence and compliance.
23PUSHING TOWARDS HIGHER BUSINESS ETHICS
THROUGHOUT GLOBAL OPERATIONS
There is a strong interdependence between and liability regimes to work in practice. The response is being carried out. This will help to
business success and the sustainability of the necessary funding can be made at short notice integrate sustainability and specific SDGs into
societies in which they operate. An operating to restore damage and to compensate victims the International Group’s sub-committee and
environment which is governed by the rule of of maritime incidents. This contributes to a working group structure.
law provides the basis for commercial certainty sustainable development both seen from
and long-term investment, growth, and an environmental perspective and from the Through the Group, Gard is represented at the
sustainable development for all. Gard believes perspective of individuals and businesses IMO and their work on international regulations
that a modern, sustainable maritime sector who suffered injuries or losses resulting from relevant to safety and pollution. This creates
must be built on transparency, fairness, and maritime casualties. a foundation for Gard to contribute to a
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
inclusion. We believe that effective corporate sustainable maritime industry that is built on
governance is essential to make our insurance Gard is the largest member of the International transparency, fairness, and inclusion.
operations secure, efficient, and transparent. Group and is represented on about 30
International Group sub-committees plus UNGC GUIDANCE FOR SHIPYARDS
HOW WE HELP MEMBERS AND a number of working groups. In 2019 we
In 2020, we took part in the development
CLIENTS proposed the establishment of a dedicated
of a guidance for shipyards as part of our
International Group Sustainability Working
Together with the other 12 mutual insurers partnership with the UN Global Compact
Group, which converted to a formal sub-
making up the International Group of P&I Clubs Action Platform. These practical guidelines
committee in 2020 and the Group’s
(IG), we provide liability insurance for more than will serve as an implementation tool for
Constitution was amended to include a
90 per cent of world’s commercial shipping. the Sustainable Ocean Principles. They will
reference to sustainable development.
The IG clubs provide the insurance cover and establish common industry standards for social
Mapping the International Group’s significant
guarantees under IMO conventions. Marine and environmental performance in shipyards
contribution in the fields of safety, including
insurers, and in particular the P&I clubs, ensure which are an important element in our supply
loss prevention and sharing safety data, claims
that financial resources are made available chain.
pooling, one industry voice and casualty
for the international maritime compensation
24Corporate governance
We believe that effective corporate governance
is essential and have established an open and
transparent framework to deliver insurance
products and services to our Members and
clients. Gard has developed a set of policies
and procedures outlining its general standards
and principles. We have policies concerning
corruption, money laundering, the financing of
terrorism, whistleblowing, know your customer,
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
and to stay compliant. We have among others a
Corporate Governance Manual, General Claims
Handling Instructions, Underwriting Instructions
and Bribery Prevention Requirements for
Correspondents. All documents are externally
available and can be found in our Corporate
Governance Manual.
25In the summer of 2020, an internal working areas of tension, the degree of unified vs.
group reviewed the risks of failure of diverse interpretation and issues related to
international shipping laws. Input was also implementation and application in practice.
sought from experts in maritime law at
The work has given Gard a better internal
the the universities of Oslo, Norway and
understanding of the overarching framework
Southampton, UK.
of international shipping laws and any
The risk was considered for 36 legal vulnerabilities that exist. The next step is to
instruments, mostly IMO/UN instruments, agree and implement more structured risk
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
but also instruments originating from the monitoring, with trigger points for elevating
Hague Conference and Comité Maritime concerns both internally as well as externally
CASE STUDY: International (CMI). “Failure” was defined as to industry partners such as the International
WHAT IF SHIPPING LAW partial or total disregard of the corresponding Group.
law and enforcement by major maritime states
SHOULD FAIL? or several minor maritime states. The main
focus was on the likelihood of it happening
and likely impact of such failure on Members,
back to the International Group of P&I Clubs and
highlights
other stakeholders such as the reinsurers
of the International Group. The review
gave us an insight into how prominent and
strong the relevant legal instrument is today,
26OUR INTERNAL PROGRESS the organisation does not become a target for Our whistleblower policy and portal have been
executing such transactions. highlighted internally at every presentation
Our code of business and ethics
opportunity this year. The Compliance
Training on business ethics department has reminded employees of their
The Code of Ethics and Business Conduct
remains unamended. It is incorporated in all rights and the different channels they can use to
To create visibility and engagement around
Norwegian employment contracts since 2012 submit concerns. It has been emphasised that
topics such as corruption, bribery, and
and any employees who joined before that date submissions via the Ernst & Young (EY) portal
kickbacks, we have organised several internal
have confirmed they have read and understood can be done anonymously. The EY portal makes
and external webinars and workshops. By way
the Code. The Code is also incorporated into it possible to highlight censurable conditions
of example, in 2020, we held an anti-corruption
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
employment contracts in the UK. Employment and conditions related to whistleblowing.
webinar with three external speakers from the
contracts outside of Norway and the UK do Money laundering reports are immediately sent
Maritime Anti-Corruption Network and law
not have the Code incorporated but this is to Chief Legal Counsel and actions will be sent
firms Wiersholm and Penningtons Manches
something that HR will look further into. directly to EY. EY conducts an initial review of
Cooper. The webinar had more than 300
the case, before it is handed over to the Group
participants across our offices connected to the
Employees are regularly reminded of the Code Compliance Officer and/or HR, depending on
live presentation. Several employees viewed
through internal training. This year’s focus the underlying reason for the concern. In some
the recorded presentation after the event.
was on corruption, bribery, and kickbacks and cases, EY can act as a third-party advisor to
This was followed by a survey for the Claims
how we can become better at identifying the ensure the case is resolved satisfactorily.
department, including the support function.
signs, near misses and better understand the
The results were analysed and followed up with
reality in which our local service providers find
interviews with a handful of randomly selected
themselves. In 2020 Gard worked actively
employees. The combined results identified
on improving controls to monitor the flow of
improvement opportunities in the systems,
incoming and outgoing payments to ensure
procedures, and knowledge.
27Responsible supply chain management implementation of sustainability-related Our reinsurance related costs are divided
considerations in our supply chain. into reinsurance for Gard, including treaty
Gard supports Members and clients all around reinsurance, facultative reinsurance and
the globe and, as a result, works with a diverse We have divided our supply chain into three fronting, and International Group Pooling
range of suppliers including software and main categories: supply chain related costs Agreement which reflects our net contribution
hardware providers, brokers, consultants, during settlements of insurance claims, to the other clubs of the International Group
correspondents, and reinsurers. We aim to take reinsurance costs and operational expenses. through the pooling arrangement of claims
sustainability considerations into account for Categorising our supply chain creates insights sharing.
all our suppliers and an ESG screening via the and further transparency that we use to assess
Ecovadis assessment is part of the management sustainability risks and opportunities in working Our operational expenses consist of several
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
of new contracts in the Technology department. with our suppliers. different supplier groups, which can be seen in
Ecovadis is a collaborative platform for the charts on the next page:
Most of our claims’ payments are settlements
sustainable supply chain management, which
paid to assureds or on their behalf to third
covers a wide range of screening criteria
parties. What is described in this section
across the topics of environmental impacts,
is fees for different kinds of claims services
human rights, labour practices, ethics, and
that we buy. These fees consist of payments
sustainable procurement. This allows us
to lawyers, external service providers (ESP),
to systematically assess the sustainability
correspondents, surveyors, and other costs.
performance of suppliers with the help of key
performance indicators. Moreover, we are In 2020, 100 per cent of our correspondents
establishing a Procurement team within our signed Gard’s Bribery Prevention Requirements
Finance department to provide departments and our Code of Ethics and Business conduct.
across Gard with procurement support. This
function will be key to further ensuring the
28Total expenses by main categories Reinsurance related
Operational
Reinsurance IG Pool Agr.
Settlements of Reinsurance
insurance claims
0% 20% 40% 60% 0% 5% 10% 15% 20%
Percentage of total expense Percentage of total expense
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
Operational expenses Claims handling costs per supplier type
Memberships Lawyer Africa
Americas
Tax ESP
Asia
Real Estate
Correspondent Europe
Other expenses
Surveyor
Employee insurance and pension
provisions & Professional service fees
Other
IT and digital subscriptions
0% 1% 2% 3% 4% 0% 5% 10% 15% 20%
29
Percentage of total expense Percentage of total expenseDRIVING SUSTAINABLE MARITIME DEVELOPMENT
WITHIN OUR INDUSTRY AND BEYOND
Transitioning to a more sustainable maritime Tracking market trends and maintaining ability of Gard to work with our partnerships
industry poses risks and creates new and fostering new relationships will help to has to a degree been helped by the global
opportunities for insurers, our Members and contribute to market development. Promoting pandemic since it is now possible to hold
clients, and society. This provides a strong best practices, knowledge sharing, and industry meetings more frequently as they are
incentive for collaboration and Gard is actively effective administration will contribute to global invariably virtual. This has resulted in better
involved in a range of industry and multi- operational excellence. This process has helped attendance, greater efficiency and noticeably
stakeholder partnerships to enable sustainable us to refresh our industry goals and priorities more output.
maritime development. for the coming years. We have agreed to use
common tools to harmonise our approach We have increased our engagement with
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
OUR INDUSTRY APPROACH in the market, and to create an even more the University of Oslo, we are developing
focused approach to sustainability and positive a relationship with the University of Rome,
During 2020/21 we looked at how Gard’s and we have signed an agreement with
industry contribution could be linked more industry influence.
the University of Southampton’s Institute of
closely to its long-term aspirations of financial
How we work with our industry Maritime Law to encourage collaboration with
strength, market development and global the renowned Southampton Marine & Maritime
operational excellence. We found that Gard’s Gard has 99 direct and 11 indirect memberships Institute on topics such as global trends,
financial strength is linked to the wider industry. of industry bodies, boards, and committees technology, and climate risks.
For example, greater financial strength can including a wide range of participations in
be achieved by promoting good governance, working groups and subcommittees. We have
transparency, and ethics, and by acting over 200 separate lines of participation through
sustainably and contributing to the fields of 95 Gard employees. This is in addition to Gard’s
climate change and in legal and regulatory routine industry and academic engagement
developments. in the form of articles, webinars, publications,
lectures, presentations, and speeches. The
30The Nordic Association of Marine good occasion to reiterate the business case for UN Action Platform for Sustainable
insurers (Cefor) sustainable maritime development. Gard’s CEO Ocean Business
shared experiences from Gard’s work related
Cefor promotes common interests and to ESG risks and opportunities at a high-level Gard is a Patron Member of the UN Global
sustainable ocean practices amongst its event co-organised by IUMI and UNEP FI in Compact Action Platform for Sustainable
members. Gard has a place on the Board of October 2020. Gard employees from Norway, Ocean Business. The Action Platform is taking
Directors and the Election Committee as well Singapore, Hong Kong and Japan participated a comprehensive view of the role of the ocean
as several other forums/committees. We joined in an IUMI podcast on the crew change crisis in in achieving the 17 SDGs. The aim is to explore
the ESG Working Group, which is considering February 2020. attractive, viable solutions and best practices
the 17 SDGs in the context of Cefor's clauses, for sustainable use and management of the
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
statistics, industry policy and education UN Principles for Sustainable Insurance ocean. Gard employees have been active
functions. (PSI) in many of the workstreams, contributing
our experience and expertise in producing
International Union of Marine Insurers Gard has become a signatory to the UN guidance on the Ocean Principles for the
(IUMI) Principles for Sustainable Insurance (PSI). The shipping sector, ship-building and Arctic region.
UN PSI serves as a global framework for the
Through our participation in various insurance industry to address environmental,
committees, Gard works to influence our social and governance risks and opportunities.
industry on sustainability. For example, via the Through this initiative Gard will, in collaboration
educational and training outputs and through with other insurers, seek to better understand,
policies and industry wordings as well as our prevent, and reduce environmental, social and
membership of the Executive Committee. governance risks, and optimise opportunities to
The President’s Workshop at the virtual IUMI provide quality and reliable risk protection.
Stockholm conference in September was a
31The global Covid-19 pandemic has been a Early on in the pandemic, Gard was invited to
brutal reminder that national measures to join the Covid-19 Task Force on Geopolitical
protect the health of different countries can Risks and Responses established by the
create havoc in the international supply chain. UN’s Action Platform for Sustainable Ocean
With closed borders, quarantine regulations Business. With 41 participants it has created
and airlines grounded, ships were detained, a new network with a huge amount of cross
crews could not get to a doctor and, more industry collaboration. The objective was
importantly, they could not get home. to raise awareness of the situation and
Prolonged service aboard the ship increased then produce cross industry advice and
FIVE GOALS FOR OUR SUSTAINABLE BUSINESS
seafarer stress and fatigue giving rise to recommendations to the G7 and G20 nations.
concerns for their welfare, as well as the safe
CASE STUDY: Gard worked internally to flesh out the issues
and efficient operation of the ships they crew
COVID-19 TASK FORCE and the cargoes they carry. Crew changes
that we felt were important to the debate
and contributed to a variety of Task Force
in the Covid-19 environment can require
meetings where these were discussed. In
the ship to deviate from its planned course,
essence we identified three key issues:
back to
and this can lead to a host of new problems,
medical support for ship’s crew, arranging
highlights commercial tensions and disputes between
routine crew changes, and expiry of crew and
owners and charterers as they try to continue
ship certification. These went on to become
their business.
CONT...
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