Presentation for the NFF Conference, Bodø August 2017

1. Do ecolabels lead to better environmental outcomes
in the international shipping industry?
René T. Poulsen, Roberto R. Hermann*, Carla K. Smink
NFF Conference, Bodø, August 24-26, 2017
*Presenter
Nord University Business School
roberto.r.hermann@nord.no

2. Hoopwood (2005)

3. Introduction
Buyers:
• Environmental benchmarking tools.
Sellers:
• Can differentiate their products,
• Gain market shares and
• Create new markets based on high
environmental performance
• Question whether ecolabels achieve better
environmental outcomes (Eden, 2009;
Guldbrandsen, 2009; Schepers, 2010)
• Consumers’ willingness to pay for ecolabel
products, when prices exceed the average
(Dauvergne & Lister, 2010)
• Corporations might use them to deflect
regulation or provide confusing or irrelevant
information (Schepers, 2010)
• Argue for a need for regulation of ecolabels in
order to ensure better environmental outcomes
(D’Amico, Armani, Gianfaldoni, & Guidi, 2016)

4. • Environmental footprint of international shipping (Oil spills, toxic hull
paints, Waste and garbage handling, Global climate change, air
pollution, invasive species, underwater noise, interactions with marine
mammals).
• Shipping as late adopter of ecolabels (Poulsen et al. 2016), following
suit to fisheries / forestries in the early 1990s
• Most research has been directed towards sectors with early adoption of
ecolabels such as extractive and consumer goods industries. In the
context of shipping, which faces several environmental challenges and
has seen several ecolabels emerge in recent years, the question of
ecolabel environmental effectiveness has not been thoroughly
examined
Do ecolabels lead to better environmental outcomes in the
international shipping industry?

5. Literature review
• Ecolabels not neutral: context of local and global competition, special
interest battles and local politics (Ponte 2008)
• Stakeholders motivations: can indicate environmental effectiveness
or lack of (Auld et al 2008).

6. • Very little consideration is currently given to differences in
environmental performance in the selection of deep-sea
carriers (McKinnon, 2014 p. 17).
• “…environmental upgrading in shipping is not likely to
materialize without clear and enforceable global regulation
and stronger alignment between regulation and voluntary
sustainability initiatives (Poulsen et al 2016)
• In the maritime energy efficiency literature corporate
environmental disclosure has also been addressed
(Agnolucci et al. 2014; Adland et al 2017)

7. Materials and methods
• We assess a total of five ecolabels, which we have identified from the
Sustainable Shipping Initiative web-site list of shipping ecolabels (SSI,
2016): ESI, CCWG, shippingefficiency.org/rightship, CSI, Green Award
• Dataset (Ecolabels websites and Lloyd’s List)
• Codebook prepared based on literature review of best practices in
FSC (Forest products) and MSC ecolabels (Fisheries)

8. 0
5
10
15
20
25
30
35
40
45
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
CCWG CSI Fair Winds Charter Green Award ESI Green marine Right Ship Shipping efficiency
Step 1: We obtained all articles published in Lloyd’s List under the tokens
«Environmental Ship Index» OR ESI OR «Clean Cargo Working Group» OR
«CCWG» OR «Rightship» OR «Shippingefficiency.org» OR «Clean Shipping
Index» OR CSI «Green Award» OR «Monitoring Reporting and Verification»
OR «MRV»

9. • Step 2: Qualitative exploration -main concepts for each ecolabel within the set of all articles

10. • Step 3: Reading and
coding each article
Category Code
Fair Winds
Charter
Green marine Green Award
Shipping
efficiency
Sum
motivation_cargo_owners 0 0 0 0
mot_cargo_enhance_transparency 0 0 2 0 2
mot_cargo_greenwash 0 0 0 0
mot_cargo_identify_shipping 0 0 1 0 1
mot_cargo_others 0 0 1 0 1
motivation_incentive_providers mot_incentiv_protect 0 0 1 0 1
motivation_ports mot_port_benchmark 0 0 0 0
mot_port_competitive 1 0 0 0 1
mot_port_greenwash 0 0 0 0
mot_port_negotiationpower 4 0 0 0 4
mot_port_other 0 1 4 0 5
mot_port_protect 2 1 12 0 15
mot_port_public_preasure 1 0 0 0 1
motivation_shipowner mot_shipowner_competitive 0 0 11 0 11
mot_shipowner_firstmover 8 0 0 0 8
mot_shipowner_greenwash 0 0 0 2 2
mot_shipowner_large_advantage 3 0 1 0 4
mot_shipowner_other 2 0 16 1 19
Uptake_how_many 0 0 0 1 1
uptake_cargo_owners 0 0 1 0 1
uptake_ports 0 4 26 3 33
uptake_shipping_companies 5 0 17 0 22
uptake_ships_number 0 0 10 1 11
uptake_whom 0 0 0 0
uptake_company 2 2 11 2 17
uptake_incentive_providers 0 0 5 2 7
uptake_type_company 0 0 0 0
Proposition 5: NGOs and civil society
Effectiveness_inspired_others 2 0 7 1 10
NGO_Civil_society 0 0 0 0
NGO_who 0 0 0 0
NGO_Why 0 0 0 0
recognition_by_community_prize 0 4 0 0 4
Proposition 6 relax standards due to concurrent schemes
Challenges 0 0 1 0 1
challenge_other_schemes 0 0 4 1 5
challenge_schemes_bundle 0 0 1 0 1
challenges_port_competition 5 0 0 0 5
challenges_type 0 0 1 0 1
Effectiveness_adoption_in_future 0 0 0 0
effect_future_why 0 0 2 0 2
effect_future_why_not 0 0 4 1 5
Interaction_other_schemes 0 0 0 2 2
Unintended_consequences 0 0 0 0
12 : unintended_what 0 0 0 0
13 : unintended_why 0 0 0 0

11. Analysis
1. Design 2. Governance
3. Regulation
corporate
disclosure

12. 1. Design
1.1 Universality
• At least five shipping ecolabels hold a global ambition: Environmental Ship Index (ESI), Clean Cargo Working
Group (CCWG), Clean Shipping Index (CSI), Green Award and Existing Vessel Design Index (EVDI, from
Rightship/Shippingefficiency.org).
1.2 Transparency
• Largely, shipping ecolabels focus on fuel consumption and air emissions. Environmental challenges not linked to air
pollution are largely ignored
• EVDI (Rightship +shippingefficiency.org)
• Based on IMO EEDI principles
• Theoretical calculation, not actual efficiencies
• CCWG also focuses on CO2 emissions
• Container shipping, env. benchmarking is challenging, Third party feeder services, Vessel sharing agreements,
• Transparency is high, datasets only available to CCWG members
• CSI –cargo driven initiative
• Broadest definition of env. Performance
• High level of transparency
• ESI & Green Award–developed by ports
• ESI concerns about air pollution
• ESI ranks ships according to reduction of pollutants
• Green award is not a tool for benchmarking –a list of certified ships is listed online, but not public
benchmarking of the ships

13. 2. Governance
2.1 Credibility
• CSI datasets are subject to third party verification by class societies
• ESI data is based on ship’s self-assessment
• EVDI credibility is questionnable –datasets arise from many sources, many are not third party verified
• Green Award verifies ships onboard audits- every three years –high credibility
2.1 Legitimacy
• CCWG aimed and gained support for its CO2 emission benchmarking methodology
• 85% of global container shipping capacity is represented by CCWG
• Lacks information about purchasing decisions
• EVDI data for 76000 ships are publicly available
• Only 39 charterers -20% global trade
• Not clear how much weight these 30 charterers put on EVDI to decide on purchasing decisions
• CSI
• Swedish initiative –staff and users from this country
• No indication of NGO participation
• 2000 vessels listed by 2013, but not listing by 2017
• Modest diffusion in the industry

14. 2.1 Legitimacy
• ESI
• 50 organizations
• Some major ports and the Panama canal, yet not wide support in the port sectror
• Only 5500 ships out of 49 000 world fleet (1000GT or above) were enrolled in ESI
• Only three times mentioned in Lloyds list
• Green Award
• Ports and incentive providers represent only a small fraction from around the world
• Evidence lacks in Lloyds list that shipping firms use ecolabels for service differentiation
• EVDI sketched as controversial
• CSI, ESI and Green Award receive little attention
• Even ferries do not list ecolabels for service differentiation
• The ecolabels literature suggests broader stakeholder participation as critical for ecolabels environmental
effectiveness
• Only ports and cargo-owners: different interests
• Stakeholders are largely absent from the discussions
• Financiers do not seem to play any role
• Ecolabels could guide investments but this is not the case
• NGOs are absent in the ecolabels member lists –suggesting legitimacy has not been achieved among
stakehoders

15. 3. Regulating corporate environmental disclosure
• Despite ecolabels, EU and IMO introduce MRV schemes
• The EU scheme requires ships calling at EU ports to release fuel and consumption data by
2018
• Shipowners very critical –”release of sensitive information”, “EU instead of global regulation”
• The IMO MRV scheme is an extension of the SEEMP –Ship Energy Efficiency Management
Plan introduced back in 2013
• Research does not provide support for the impact on behavior in shipping firms (Poulsen and
Johnson 2016)
• A major share of the international ship-owner community does not embrace idea of
enhanced transparency on fuel consumption

16. Conclusion: Do ecolabels lead to better environmental
outcomes in the international shipping industry?
• Shipping industry can potentially leverage ecolabel experiences from other
industries, pertaining to ecolabel design and governance.
• No shipping ecolabel has achieved universal recognition
• Key stakeholders, cargo-owners and ports, are concerned with different
challenges
• There is little evidence to suggest that ship-owners use ecolabels to
differentiate their services
• Some labels have been associated with considerable controversy and lack
legitimacy in the ship owner community.
• Civil society engagement from NGOs, which is important for legitimacy and
therefore environmental effectiveness, remains very low

17. • The IMO and EU MRV regulations indicate that policy makers are
dissatisfied with ecolabel achievements
• For the ecolabel literature our study shows how common concerns
about ecolabel effectiveness also have relevance in the context of
services.
• Technological maturity, as seen in shipping, does not automatically
guarantee better environmental outcomes from ecolabels

18. • Policy implications:
• Coordination of private initiatives among ports and cargo owners could avoid
duplication, enhance environmental transparency and strengthen ecolabel
legitimacy
• Alignment between public and private transparency initiatives could enhance
transparency
• Environmental challenges unrelated to ships’ air emissions (such as invasive
species, recycling and interaction with marine mammals) require further
policy attention, because they are neglected by ecolabels

19. 19
Thanks for your
attention!